Global uncertainty and adverse weather slow Mexico’s economy at the start of 2026

The combination of trade tensions tied to the Middle East conflict and freezes in the north of the country weakened GDP in the first quarter.

Mexico’s economy began 2026 on weaker footing than expected, pressured by a more uncertain external environment and by climate shocks that hit key activities. In a press conference, Finance Minister Édgar Amador Zamora attributed the slowdown in growth to shifts in global trade policy triggered by the conflict in the Middle East—raising caution in consumption and investment—and to freezes recorded in the north of the country, which affected agricultural output.

According to INEGI’s preliminary estimate, Gross Domestic Product (GDP) grew 0.1% year over year in the first quarter, but fell 0.8% from the previous quarter on a seasonally adjusted basis. The reading suggests the year started with a loss of momentum relative to the end of 2025, alongside a sectoral reshuffling in which the resilience of certain manufacturing industries was not enough to offset weakness in segments exposed to supply shocks and external volatility.

The Finance Ministry underscored that the new international trade conditions have affected manufacturing industries more exposed to indirect disruptions along supply chains. In practical terms, the biggest risk for Mexico does not come only from a specific tariff or isolated restriction, but from shifts in investment, inventories, and hiring decisions that typically occur when global firms reassess logistics routes, suppliers, and production locations.

In this context, automotive exports and their supplier network faced pressure, although performance was partially offset by strong activity in non-automotive manufacturing with higher technological content, such as computer equipment and components. The official narrative argues that Mexico’s relative advantage—through preferential access and rules of origin under the USMCA—has served as a buffer against competitors, even as North America’s industrial cycle becomes more erratic.

The freeze hit: agriculture, prices, and ripple effects

The weather front added a significant local shock. Freezes in the north of the country caused disruptions in crops such as tomatoes, wheat, and various vegetables, which tends to affect both value added in the primary sector and input costs in the food industry. When damage is concentrated in specific producing areas, the impact can quickly spill over into wholesale prices and seasonal availability, squeezing margins for growers, packers, and transporters. In an environment where inflation is already highly sensitive to food and energy, events like these increase short-term volatility and complicate planning for companies and retail supply chains.

The 2026 outlook is also shaped by the tug-of-war between growth and inflation and by the cost of financing. With interest rates still at restrictive levels in Mexico after the monetary tightening cycle of recent years, private investment tends to respond more slowly to bouts of global uncertainty. On top of that, the exchange rate and the cost of key imports (such as machinery and industrial inputs) can move quickly when risk appetite shifts in international markets, amplifying corporate caution.

In response to first-quarter weakness, the Finance Ministry held to its expectation that as Plan México projects and the new legal framework for infrastructure investment—with private-sector participation—move into full execution, economic activity could regain a stronger pace in the second half of the year. The agency maintains an annual growth forecast in a range of 1.8% to 2.8%, with the aim of moving closer to rates near 3% in the final quarters, supported by investment and construction.

The infrastructure push seeks to accelerate capital formation and improve logistics connectivity, a critical factor for sustaining the manufacturing boom linked to nearshoring. However, the speed of the rebound will depend on projects translating into effective execution—permits, bidding processes, financing, and coordination with state governments—and on the external environment not deteriorating further. If trade uncertainty drags on, companies may continue to delay expansions, especially in sectors integrated into cross-border value chains.

In perspective, the first quarter showed an economy sensitive both to international shocks and to domestic weather events: manufacturing can hold up thanks to regional market-access advantages, but volatility in investment and the agricultural sector’s vulnerability to weather weigh on the near-term outlook. Performance in the coming quarters will depend on infrastructure execution, stability in trade rules, and the ability to cushion food supply shocks.