IMF Projects Mexico's Economy to Rebound Above 2% by 2027

Mexico's economy is expected to return to its long-term average growth rate of above 2% by 2027, following the easing of commercial uncertainty from rising tariffs and the conclusion of the United States-Mexico-Canada Agreement (USMCA) review, according to experts from the International Monetary Fund (IMF).

In the conclusions of its annual Article IV consultation with Mexico, the IMF projected the Mexican economy will record "weak" growth of 1% this year. This slowdown is attributed to monetary and fiscal restraint, which is helping guide inflation toward its target and supporting fiscal consolidation. A third factor moderating consumption and domestic investment is the uncertainty related to tariffs and the USMCA review process.

For 2026, the IMF expects Gross Domestic Product (GDP) growth of 1.5%, reflecting a “slight acceleration” due to the easing of domestic policies. However, experts cautioned that “tariffs and commercial uncertainty will continue to constrain growth,” and the extent of efficiency losses will largely depend on the outcome of the USMCA review.

The IMF stressed that to achieve higher growth, Mexico must address infrastructure gaps, improve the business climate, strengthen judicial independence, and combat corruption and crime. Experts also highlighted the importance of free trade as a growth driver, recommending that Mexico increase commercial openness while “ensuring a stable and predictable trade environment.”

The IMF outlined a comprehensive strategy to maximize the impact of trade on economic growth, including four key elements:

1. Resolve Commercial Tensions: Addressing trade disputes with the United States is expected to stabilize investor confidence and ensure continuity in supply chains.

2. Strengthen Commercial Integration: Leverage the USMCA review to deepen integration with the United States, enhancing the benefits of regional trade while mitigating potential negative impacts.

3. Avoid Trade Distortions: The IMF specifically recommended avoiding policies that distort trade, such as new product-specific import tariffs, noting that these are “likely to be detrimental to the domestic economy.” Such measures “can weaken productivity, distort resource allocation, and generate negative side effects for trade partners.”

4. Diversify Commercial Partnerships: This includes utilizing the updated trade agreement between the European Union and Mexico and expanding trade with regional partners, such as Brazil.
    

The Article IV consultation forms part of the IMF’s annual bilateral discussions with member countries, which inform the analysis of the IMF Executive Board.