Mexico’s finance ministry has revised its 2025 economic growth forecast to between 1.5% and 2.3%, down from the previous 2.0% to 3.0% range, citing persistent supply shocks and declining residential investment. The new forecast, described as “conservative,” contrasts with lower projections from the private sector and the Bank of Mexico, as fears of a looming recession intensify.
Latin America’s second-largest economy contracted in Q4 2024 and again in January, signaling the possibility of a technical recession if Q1 2025 also shows negative growth. A central bank poll revealed private sector analysts now expect just 0.5% growth this year. Meanwhile, the Bank of Mexico forecasts a 2025 GDP range between -0.2% and 1.4%.
The finance ministry attributed the downgrade to continued supply chain disruptions and uncertainty surrounding U.S. trade policy, which is dampening business sentiment. Nevertheless, it expects growth to be supported by domestic consumption, job creation, and strategic investments. For 2026, GDP is projected to grow between 1.5% and 2.5%.
President Claudia Sheinbaum, who took office in October amid the nation’s largest budget deficit since the 1980s, faces increasing pressure but has avoided sweeping fiscal reforms. The 2025 budget deficit is estimated between 3.9% and 4.0%, falling to 3.2%-3.5% in 2026.
Inflation is expected to ease to 3.5% by the end of 2025, aligning with the central bank’s target range. By 2026, it’s projected to decline further to 3.0%. The Mexican peso is forecast to close 2025 at 20.0 per U.S. dollar and strengthen slightly to 19.7 in 2026. Crude oil production is expected to average 1.762 million barrels per day in 2025, rising modestly to 1.775 million bpd in 2026.


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