World Bank cuts growth forecast for Mexico, predicting economic stagnation

The World Bank has slashed its 2025 economical maturation forecast for Mexico amid what it called “the highest levels of commercialized uncertainty successful a decade.”

The Washington-based planetary fiscal instauration is present predicting that the Mexican system volition stagnate successful 2025 with 0% GDP growth.

The forecast is 1.5 percent points little than that the World Bank made successful January successful its Global Economic Prospects report.

The caller forecast is included successful an beforehand transcript of a section of the upcoming World Bank study “Organized Crime and Violence successful Latin America and the Caribbean,” which volition beryllium released adjacent Monday.

Among 29 Latin American and Caribbean (LAC) countries, lone Haiti is forecast to grounds a worse economical effect than Mexico this year. The World Bank is predicting that the system of the troubled Caribbean state volition declaration 2.2% successful 2025.

On the different extremity of the scale, it is predicting that the system of Guyana volition turn 10% this twelvemonth and that Argentina volition grounds a 5.5% economical expansion.

Though Mexico’s economical maturation forecast was cut, determination was a metallic lining: Social programs and occupation maturation reduced poorness by 7% successful Mexico since 2018, the champion betterment successful Latin America. (Gobierno de la Ciudad de México/Cuartoscuro)

The World Bank’s downgrade of its maturation forecast for Mexico comes conscionable aft the International Monetary Fund (IMF) slashed its outlook for Latin America’s 2nd largest economy. The IMF is present predicting Mexico’s GDP volition declaration 0.3% this year, a downward revision of 1.7 percent points compared to its January forecast.

The Mexican system grew 1.5% annually successful 2024.

‘A much challenging outer scenario’

The World Bank besides lowered its maturation outlook for the Mexican system successful 2026. It is present forecasting 1.1% maturation adjacent year, down from a 1.6% forecast successful January.

In “The State of the LAC Region” section of its upcoming report, the World Bank said that the outlook for the portion “has go much uncertain arsenic humble advances connected the interior beforehand are being compounded by a much challenging outer scenario.”

“… The outer situation … has changed substantially successful the six months since the October 2024 Latin America and Caribbean Economic Review (LACER), with some short-term and semipermanent consequences,” the fiscal instauration said.

“… The evident displacement toward higher tariffs by the United States casts uncertainty connected the nearshoring project, the signifier of bringing offshore operations to adjacent oregon affable countries, and planetary marketplace entree much generally,” the World Bank said.

With rising tariffs, the aboriginal of nearshoring successful Mexico is uncertain, the World Bank reported. (Juan José Estrada Serafín/Cuartoscuro)

“… Even earlier the accrued uncertainty introduced by the rising US tariffs, determination was grounds that the portion was perchance missing the vessel connected nearshoring,” the slope said.

In the 3 months since Donald Trump began his 2nd word arsenic president, the United States authorities has imposed tariffs connected steel, aluminum and cars made successful Mexico arsenic good arsenic Mexican goods not covered by the USMCA escaped commercialized pact.

The Mexican authorities is presently attempting to negociate exemptions from the steel, aluminum and car tariffs, which the United States imposed connected imports from astir the world.

The World Bank said “it is intolerable to cognize wherever the caller tariff authorities volition settle.”

For now, “higher tariffs, and the highest levels of commercialized uncertainty successful a decade, impede further integration of the portion into U.S. proviso chains, arsenic good arsenic imperiling jobs successful export-related industries,” it said.

The World Bank highlighted that Mexico precocious signed a caller commercialized statement with the European Union, and said that “represented a measurement toward diversification of markets.”

The Mexican authorities is presently moving to negociate exemptions from U.S. steel, aluminum and car tariffs. (Ricardo Gómez Ángel/Unsplash)

However, it added that “the emerging challenges necessitate addressing a present decades-old docket successful infrastructure, education, regulation, competition, and taxation argumentation to summation some productivity and the nimbleness of the region’s economies successful the look of caller uncertainty.”

Sheinbaum takes contented with World Bank forecast 

At her Thursday greeting property conference, President Claudia Sheinbaum expressed her disagreement with the economical forecasts of planetary organizations specified arsenic the World Ban, the IMF and the OECD, which is besides predicting that the Mexican system volition declaration this year.

International fiscal organizations “have economical models that don’t instrumentality into relationship what we are doing,” she said.

Sheinbaum said that if their models found that “there is going to beryllium ostentation and economical recession successful the United States,” they accidental “there volition [also] beryllium recession successful Mexico” owed to the “economic integration” betwixt the 2 countries.

She asserted that planetary fiscal organizations besides “don’t instrumentality into account” that “not everything is determined yet” with respect to the United States’ commercialized relationships with the remainder of the world, and “particularly” its narration with Mexico, which sends much than 80% of its exports to its bluish neighbor.

Returning to her archetypal claim, Sheinbaum said that planetary organizations neglect to see Plan México, the national government’s ambitious economical inaugural to turn the system by boosting home manufacture and gathering caller infrastructure projects, among different measures.

Sheinbaum criticized the World Bank forecast for not taking into relationship existent economical improvement initiatives. (Presidencia)

The World Bank said successful its study that nationalist concern successful Mexico “supported the enlargement of aggregate concern and output maturation during 2023,” — erstwhile the Mexican system grew 3.2% — “but arsenic it mislaid momentum during 2024, this stimulus weakened.”

Even though large projects specified arsenic the Maya Train and the caller Pemex refinery connected the Tabasco seashore are present mostly completed, Sheinbaum believes that her government’s concern successful different infrastructure projects — including highway, rail, h2o and lodging ones — volition assistance spur maturation successful Mexico.

“If determination wasn’t nationalist investment, determination would astir apt beryllium the simplification successful economical growth” that the IMF is forecasting, she said connected Tuesday.

On Thursday, Sheinbaum highlighted the economical benefits of backstage concern arsenic well.

The World Bank and IMF “probably don’t instrumentality into account” the US $3.6 cardinal that brewing institution Grupo Modelo is going to put successful Mexico oregon different backstage concern presently successful the pipeline, she said.

Sheinbaum said that the Finance Ministry — which is forecasting that the Mexican system will grow by 1.5-2.3% this twelvemonth — “does instrumentality into relationship each these variables” and truthful comes up with “a wholly antithetic result.”

Major pubic infrastructure projects similar the Maya Train person boosted the Mexican system successful caller years. (Presidencia/Cuartoscuro)

“… The system of Mexico is beardown and the full furniture is moving truthful that Plan Mexico becomes a reality,” she added.

Need-to-know economical information for Mexico

• The Mexican system contracted connected a sequential ground successful the last 4th of 2024, and preliminary information indicates that it besides declined successful the archetypal 4th of 2025.
• New information released connected Thursday show’s that Mexico’s yearly header ostentation complaint ticked up to 3.96% successful the archetypal fractional of April, from 3.80% crossed March.
• The Bank of Mexico’s cardinal involvement complaint is presently acceptable astatine 9% aft a 50-basis-point chopped successful precocious March.
• The USD:MXN speech complaint was 19.58 soon earlier midday Mexico City time, according to Bloomberg.

By Mexico News Daily main unit writer Peter Davies ([email protected])