Analysts Raise GDP Outlook and Warn Foreign Policy Will Continue to Weigh on Performance
Private forecasts for the Mexican economy have improved slightly, even as warnings about risks from abroad increase. According to Banco de México’s expectations survey of local and foreign analyst groups, the consensus raised its growth projection for this year to 0.4% from 0.3%, and trimmed the general inflation forecast to 3.97% from 4.04%. Despite this adjustment, specialists emphasize that foreign policy and weak global demand remain the biggest obstacles to the country’s momentum.
In its recent quarterly report, the central bank highlighted that tariffs imposed by the United States have had a limited impact on exports thanks to USMCA protections. At the same time, the monetary authority itself upgraded its growth estimate for this year to 0.6% from a previous 0.1%, acknowledging that activity has held up better than expected in a complex international environment. Banxico’s assessment is that the impact of changes in US economic policy could take time to materialize, giving local performance some short-term leeway.
The macroeconomic context presents both opportunities and challenges. Domestic consumption has been supported by a relatively strong labor market, wage increases, and remittance inflows, while investment related to supply chain reorganization (nearshoring) continues to drive interest in manufacturing and logistics sectors in the north and the Bajío region. On the other hand, the industrial slowdown in the US and the moderation of global trade are limiting export growth, particularly in automotive and electrical equipment. Inflation continues trending downward toward the target, though pressure in services and persistent inflation call for caution.
Foreign policy risks are mainly centered on potential tariff adjustments or regulatory measures in North America, as well as ongoing trade disputes. The scheduled USMCA review in 2026 is looming and could reshape rules of origin, as well as labor and energy standards. In the near term, decisions regarding US trade policy and compliance verification processes could cause volatility in trade and investment flows. Specific disputes—such as those involving energy or agricultural products—will continue to be closely watched by markets.
Domestically, the path of monetary policy will depend on effective disinflation and the Federal Reserve’s stance. If inflation steadily converges toward the target, Banxico could have room for gradual rate cuts, though recent communications suggest they will prioritize caution to avoid unanchoring expectations. On the fiscal front, after a deficit increase in 2024, a gradual consolidation is expected, with implications for public investment and potential growth. Pemex’s solvency, the availability of electricity and water, and regulatory certainty will be key factors for turning nearshoring interest into concrete productive projects.
Looking ahead, the baseline scenario points to modest but positive growth, with domestic demand offsetting external weakness. The balance of risks remains tilted to the downside due to external factors, although continued USMCA implementation, macro stability, and progress on infrastructure projects could help cushion some shocks. Market attention will focus on the path for service inflation, currency volatility, and signals related to NAFTA/USMCA agreement review.
In summary, Mexico’s economic outlook for 2025 has marginally improved, but the path forward remains shaped by external conditions. Progress on inflation opens the door for a less restrictive monetary stance, as long as price pressures do not rebound. The challenge will be to translate nearshoring into higher productivity and investment, while managing foreign policy risks and safeguarding macro stability.
