Banxico slashes 2025 GDP growth forecast for Mexico to 0.6%

Mexico’s cardinal slope lowered its estimation for GDP maturation successful 2025 to 0.6% Wednesday, portion besides informing of the hazard of economical contraction.

The Bank of Mexico (Banxico) said its latest forecast — issued arsenic portion of its quarterly study — takes into relationship the antagonistic fourth-quarter show slowdown, the paper El Economista reported, and brings the cardinal bank’s forecast successful enactment with projections issued by fiscal services institution Moody’s Ratings successful January.

Banxico caput Victoria Rodríguez. (Presidencia)

In announcing the caller estimate, Banxico Governor Victoria Rodríguez cautioned Wednesday that the caller fig does not yet see the imaginable interaction of immoderate measures the U.S. whitethorn instrumentality with respect to commercialized and tariffs.

“The system faces assorted challenges, including weakness owed to interior considerations and uncertainty owed to U.S. policies that whitethorn alteration the configuration of worth chains,” she said.

Among the interior weaknesses cited by Rodríguez were debased user depletion and slowing backstage investment. These factors, arsenic good arsenic fund restraints and ostentation concerns, are expected to prevail during the archetypal fractional of 2025.

Just past month, a survey conducted by Banxico recovered that backstage assemblage analysts had reduced maturation forecasts from 1.12% to 1%, and this was down from the bank’s estimation of 1.2% successful November.

A 0.6% maturation complaint would beryllium considerably little than the 2.3% maturation complaint projected by the Finance Ministry successful its 2025 fund and little than the 1.5% maturation recorded successful 2024. It would besides beryllium Mexico’s poorest economical show since 2020, according to the paper El Financiero.

In its quarterly report, Banxico said it expects Mexico’s system to fluctuate betwixt –0.2% and 1.4%, a little scope than projected successful November erstwhile the Board of Governors predicted a show scope from 0.3% and 2.0%.

One origin successful Banxico’s reduced maturation forecast is national fund restrictions, which volition bounds the magnitude that nationalist spending volition lend to Mexico’s 2025 GDP compared to caller years. (Isaac Esquivel/Cuartoscuro)

Rodríguez said the mediocre fourth-quarter performance induced a mathematical effect toward a little basal for growth, “reducing the GDP maturation forecast.” Additionally, national fund restrictions volition bounds the contributions that nationalist spending has contributed toward productive activities successful the caller past.

Banxico besides cited tariff threats issued by U.S. President Donald Trump, saying this lone adds to the uncertainty to Mexico’s economical panorama this year. However, the latest maturation forecast does not see estimates related to specified aboriginal trade-related effects.

“It would beryllium premature to travel to immoderate conclusions with respect to specified measures,” Rodríguez said. 

Just this week, Trump said helium whitethorn enforce 25% tariffs connected each car imports into the U.S. This came conscionable a week aft the U.S. president said he mightiness levy 25% tariffs connected car imports from Mexico connected apical of 25% tariffs connected planetary alloy and aluminum imports.

Pamela Díaz, an economist successful Mexico with the multinational slope BNP Paribas, said the uncertainty surrounding U.S. commercialized argumentation volition apt origin backstage concern to stagnate passim 2025, with solution improbable until adjacent year. 

Banxico besides mentioned risks for Mexico related to volatility successful nationalist and planetary fiscal markets portion besides informing astir the anticipation of an underperforming U.S. economy.

With reports from El Economista, El Financiero and América Economía