Moody’s Lowers Mexico’s 2026 Forecast Amid Trade Uncertainty

Moody's Ratings has revised downward its 2026 economic growth projections for Mexico and France in its latest Global Economic Outlook for 2026 and 2027. The agency now expects Mexico’s GDP to expand 1.2%, down from 1.7% forecast in August, while France’s estimate was cut to 0.9% from 1.2%.

Both projections sit below the 1.5% average growth anticipated for G-20 economies, which together represent more than 80% of global GDP.

Emerging Markets and Global Outlook

Moody's said global growth will remain moderate amid persistent trade uncertainty, with emerging markets expected to provide some support. Average expansion among G-20 emerging economies is projected at 4%, well above Mexico’s forecast.

Within this group, which includes China, India, Brazil, Russia, Indonesia, Turkey, Saudi Arabia, Argentina, and South Africa, Mexico’s outlook ranks among the weakest, far behind India’s projected 6.4% growth.

Mexico’s economy contracted 0.3% year-on-year in 3Q25, according to preliminary figures from the National Institute of Statistics and Geography (INEGI). If confirmed, it would mark the first annual decline in economic activity since late 2021.

The downturn was led by a 2.9% fall in secondary activities such as manufacturing, construction, mining, and energy generation. Services and commerce, which make up the largest share of GDP, also slipped 0.9%, while agriculture grew 3%, not enough to offset broader weakness.

The IMF projects a modest recovery in 2026, with GDP growth of 1.5%, driven by a gradual easing of domestic policies. Still, analysts caution that “tariffs and trade uncertainty will continue to weigh on growth,” with the outcome of the USMCA review likely to shape future performance.

Brighter Outlook for US and China

In contrast, Moody’s raised its 2026 growth forecasts for the United States and China.

The US outlook improved from 1.4% to 1.8% for 2026 and from 1.2% to 2% for 2025, supported by steady consumer spending and strong investment in artificial intelligence, despite signs of labor market cooling. The agency noted that while growth is slowing, income trends remain consistent with the later phase of the economic cycle.

For China, Moody’s said exports and government support are offsetting domestic fragility. Still, it warned of ongoing structural issues, uneven consumption, limited business credit, and declining fixed investment, which continue to constrain internal momentum.