Bank of Mexico cuts 2025 economic growth forecast to just 0.1%

The Bank of Mexico (Banxico) has slashed its 2025 and 2026 maturation forecasts for the Mexican economy, citing expectations of “sluggish” home enactment and “significant challenges” related to U.S. protectionism.

The cardinal slope said successful its archetypal 4th study that is present forecasting maturation of conscionable 0.1% this year, down from a 0.6% prediction successful its erstwhile report.

For 2026, Bank of Mexico chopped its economical maturation forecast to 0.9% from 1.8%.

“Domestic economical enactment is expected to beryllium sluggish implicit the forecast horizon,” said the quarterly report, which was published connected Wednesday.

“In summation to the weakness that has already been observed, the planetary system faces important challenges stemming from the changes successful U.S. commercialized policy. Since the erstwhile report, the United States has imposed tariffs of varying magnitude connected astir of its imports, and the anticipation of further measures remains,” Banxico said.

“There is uncertainty regarding the effects that these actions could person connected Mexico’s outer demand. For the clip being, lone a constricted effect is incorporated into our outlook, considering the resilience shown by Mexican exports based connected the astir caller accusation available, the preferential attraction these exports proceed to person nether the USMCA framework, and pending further accusation connected the accommodation mechanisms of home exporting firms,” the slope said.

Principales #PrevisionesEconómicas dadas a conocer en el #InformeTrimestral enero-marzo 2025. #BancodeMéxico https://t.co/Tr6EI8Cn1f pic.twitter.com/v29rscZPii

— Banco de México (@Banxico) May 28, 2025

The study was prepared and published earlier a United States national tribunal connected Wednesday blocked United States President Donald Trump from imposing tariffs connected imports nether a U.S. exigency powers law, ruling that helium exceeded his authority.

The Associated Press reported that the ruling threw “into uncertainty Trump’s signature acceptable of economical policies that person rattled planetary fiscal markets, frustrated commercialized partners and raised broader fears astir ostentation intensifying and the system slumping.”

However, the U.S. president could usage laws different than the International Emergency Economic Powers Act to enforce tariffs.

President Claudia Sheinbaum said connected Thursday that the Economy Ministry would behaviour an investigation of the “reach” of the ruling arsenic it volition impact tariffs connected Mexican goods. She noted that the U.S. authorities was challenging the ruling.

“We’re going to wait,” Sheinbaum said.

More than 80% of Mexico’s exports spell to the United States, making it peculiarly susceptible to U.S. protectionism. Duties presently use to Mexican steel, aluminum, cars and goods not covered by the USMCA.

The interaction of Trump’s commercialized argumentation is magnified successful Mexico, which sends much than 80% of its exports to the U.S. (Lloyds)

The tariffs connected goods not covered by the North American escaped commercialized pact were imposed by the United States owed to what the White House said was a nonaccomplishment by Mexico to instrumentality capable enactment against “the influx of lethal drugs” to the U.S. Those tariffs were blocked by Wednesday’s tribunal ruling.

The work of Banxico’s latest maturation forecasts came aft the Mexican system avoided a method recession by expanding 0.2% successful the archetypal 4th of 2025 compared to the last 4th of past year. The system contracted 0.6% connected a sequential ground successful the last 4th of 2024.

In April, the International Monetary Fund and the World Bank besides slashed their economical maturation forecasts for Mexico. The erstwhile is present forecasting a 0.3% contraction portion the second is predicting 0% growth.

The astir caller 2025 forecast from Mexico’s Finance Ministry was maturation successful the scope of 1.5% to 2.3%.

‘A stagnant economy’

Gabriel Cuadra, a lawman politician of the Bank of Mexico, said Wednesday that “after the Mexican system showed resilience successful 2023 and 2024, present successful 2025 we’re forecasting an [economic growth] saltation adjacent to zero, a stagnant system with a equilibrium of risks biased to the downside.”

In its report, Banxico mentioned a scope of “downside risks passim the forecast horizon.”

They included:

• That uncertainty “driven by the policies that could beryllium implemented successful the United States” increases and “negatively affects outer request arsenic good arsenic depletion and concern spending successful Mexico.”
• That economical maturation successful the U.S. is little than expected.
• That the simplification successful nationalist spending successful Mexico “has a stronger interaction connected economical activity.”
• That “severe upwind phenomena, specified arsenic utmost temperatures, cyclones, oregon droughts, adversely interaction the Mexican economy.”

Banxico besides cited assorted “risks to the upside passim the forecast horizon.”

They included:

• That “incoming information regarding U.S. commercialized argumentation mitigates uncertainty and signals a favorable solution that volition payment economical enactment successful the region.”
• That maturation successful the U.S. is “greater than expected, favoring Mexico’s outer demand.”
• That “under the USMCA, the planetary reconfiguration of accumulation processes provides a greater-than-expected boost to investment.” (Mexico received grounds precocious overseas nonstop concern successful the archetypal 4th of the year.)
• That “public spending provides a greater-than-expected boost to economical activity.”

Although Banxico is forecasting 0.1% growth, Cuadra conceded that it is imaginable that the Mexican system volition declaration successful 2025.

Despite the atrocious news, Banxico Governor Victoria Rodríguez Ceja said Mexico is not entering a recession. (File photo)

The Bank of Mexico’s forecast scope is -0.5% to 0.7%, indicating that it is not wholly ruling retired the anticipation of GDP declining this year.

However, Banxico Governor Victoria Rodríguez Ceja told a property league connected Wednesday that “we are foreseeing a play of weakness for economical activity, but not a recession.”

Rodríguez asserted that strengthening of the regularisation of instrumentality successful Mexico and promoting contention successful the marketplace are indispensable to enactment economical growth.

“It is [also] indispensable to beforehand greater concern and productivity improvements successful the economy,” she added.

Despite an summation successful ostentation this year, the Bank of Mexico has chopped its cardinal involvement complaint by 50 ground points aft each 3 monetary argumentation meetings this year, successful portion owed to the prevailing weakness successful the Mexican economy.

With reports from El Financiero