Key facts
- Mexico's GDP growth forecasts for 2026 and 2027 have been downgraded.
- Concerns over trade rules with the United States are cited as a reason for the downgrade.
- Industrial production is expected to be weak despite strong exports.
- The USMCA trade agreement's 10-year term with annual reviews has increased uncertainty.
- Inflation is projected to be around 4.0% in 2026 and 3.8% in 2027.
- Mexico's central bank is expected to keep its benchmark rate at 6.50% through at least the end of next year.
Mexico's economic growth is projected to be slower than previously anticipated for both 2026 and 2027, according to a Reuters poll of economists. Concerns surrounding trade rules with the United States, particularly the revised terms of the USMCA agreement, are dampening investment and contributing to a weaker outlook.
Analysts noted that industrial production is expected to remain sluggish despite a strong performance in Mexican exports and government initiatives aimed at boosting private capital spending. The median GDP growth forecast for 2026 was revised down to 1.1% from 1.5%, and for 2027 to 1.8% from 1.9%. This implies a more subdued recovery following a modest 0.5% growth in 2025.
The uncertainty surrounding the USMCA, following Washington's decision to opt for a 10-year term with annual reviews instead of a 16-year extension, has complicated long-term investment decisions in export-oriented sectors. While trade flows are expected to remain robust in the medium term, the potential for changes to the agreement during annual reviews poses a challenge for businesses.
The auto sector is identified as particularly sensitive to the ongoing negotiations, with Mexican officials reportedly rejecting proposed changes to rules of origin. Experts suggest that while firms can often adapt to tariffs and regulatory shifts, uncertainty over the future operating framework is a more significant deterrent to investment.
Government measures to support domestic industries are seen as having only a marginal impact, given Mexico's limited fiscal space. Alternative strategies, such as opening the energy sector, might be more effective, according to some analysts.
Regarding inflation, the median forecasts for 2026 and 2027 remain unchanged at 4.0% and 3.8% respectively, which are at or near the upper limit of the central bank's target range. To manage these inflationary pressures, the central bank is anticipated to maintain its benchmark interest rate at 6.50% at least until the end of next year.