Mexico Faces Cuts to Economic Growth Projections Amid Global Challenges
The World Bank has lowered its forecast for global economic growth in 2025 to 2.3%, citing growing trade tensions, international political uncertainty, and persistent inflationary pressures. These adverse conditions are significantly impacting Latin America and, in particular, Mexico, whose economy is expected to face one of the region's most challenging outlooks in the coming years.
According to the organization, the Latin American economy is also projected to grow by 2.3% in 2025, a figure that represents a 0.2 percentage point decline from previous estimates. The report warns that global growth is on track to post one of its weakest average rates this decade since the 1960s, posing significant risks to living standards and development across several regions.
Specifically for Mexico, the World Bank estimates that the country's Gross Domestic Product (GDP) will grow by just 0.2% in 2024, a considerable reduction of 1.3 percentage points from recent projections, with an expected increase of 1.5% in 2026. This performance, which falls below the regional average, is attributed mainly to tighter trade barriers imposed by the United States, its main trading partner. Washington has implemented 25% tariffs on various Mexican imports not covered under the United States-Mexico-Canada Agreement (USMCA), significantly affecting Mexico’s exports, which rely heavily on the U.S. market.
Approximately 80% of Mexico’s exports in 2024 were destined for the United States, and about half of these did not meet USMCA requirements, highlighting the structural vulnerability of the Mexican economy to changes in U.S. trade policy. In addition, persistently high interest rates, both internationally and domestically, have begun to impact internal demand, discouraging both consumer spending and private investment.
The report also notes that Latin America as a whole faces a climate of rising trade protectionism and reduced dynamism in exports due to the slowdown in global trade and the anticipated drop in commodity prices. Nevertheless, resilient domestic demand has prevented a more severe downturn in some of the region’s economies.
More broadly, the World Bank warns that risks for Latin American economies remain high. Among these risks are a possible sharper slowdown in the United States—which would further affect Mexico—a slowdown in the Chinese economy, and a decrease in migrants’ capacity to send remittances, a key factor for several countries in the region. Furthermore, inflation remains near the upper limit of central banks’ targets, curbing the ability to cut interest rates and stimulate growth.
Going forward, analysts emphasize the need for Mexico to diversify its export markets and strengthen its domestic market to reduce its exposure to external shocks in the short and medium term. In the current context, the pending agenda includes enhancing competitiveness, attracting more foreign direct investment—particularly as the result of potential supply chain relocation (nearshoring)—and mitigating vulnerabilities in external trade.
In summary, Mexico faces a challenging environment due to increased global protectionism and its heavy dependence on the U.S. market, combined with restrictive monetary conditions and growing inflationary pressures. While the economy is not at imminent risk of recession according to the World Bank, the low growth forecasts highlight the urgent need to implement structural reforms and policies that will strengthen resilience to future external shocks.
