Mexico Lowers Growth Forecast Amid Trade Uncertainty

The Ministry of Finance has lowered its economic growth forecast, citing slower residential investment, reduced oil and gas activity, and lingering supply chain disruptions from 2024, according to its 2026 Preliminary Economic Policy Guidelines. The Ministry also pointed to rising uncertainty around US trade policy, especially under former President Trump. As a result, the GDP growth projection for 2026 was revised down from a 2–3% range to between 1.5% and 2.5%.

Despite the downward revision, analysts say the government’s projections remain overly optimistic. A recent Banxico survey showed analysts cutting their 2025 growth forecast from 0.8% to 0.5%, and 2026 from 1.7% to 1.6%. Citi’s biweekly poll reflected similar adjustments, with 2025 expectations falling from 0.8% to 0.6%, and 2026 estimates dropping slightly from 1.8% to 1.7%.

Gabriela Siller, Chief Economist, Grupo Financiero BASE, said even the lower end of the government’s 2025 forecast is nearly triple the estimates of most analysts. “If that level of growth is not achieved, the ratio of financial requirements to GDP will be significantly higher,” she explained.

The revision comes after a 0.6% contraction in 4Q24 and annual growth of just 1.2%, which is the weakest since the pandemic. Analysts expect further contraction in early 2025 due to trade uncertainty and the possible imposition of US tariffs, which could tip Mexico’s economy toward a recession. This view contrasts with government’s forecast and aligns more closely with warnings from the OECD and private analysts