Mexico’s central bank lowered its estimate for GDP growth in 2025 to 0.6% Wednesday, while also warning of the risk of economic contraction.
The Bank of Mexico (Banxico) said its latest forecast — issued as part of its quarterly report — takes into account the negative fourth-quarter performance slowdown, the newspaper El Economista reported, and brings the central bank’s forecast in line with projections issued by financial services company Moody’s Ratings in January.
In announcing the new estimate, Banxico Governor Victoria Rodríguez cautioned Wednesday that the new figure does not yet include the potential impact of any measures the U.S. may take with regard to trade and tariffs.
“The economy faces various challenges, including weakness due to internal considerations and uncertainty due to U.S. policies that may change the configuration of value chains,” she said.
Among the internal weaknesses cited by Rodríguez were low consumer consumption and slowing private investment. These factors, as well as budget restraints and inflation concerns, are expected to prevail during the first half of 2025.
Just last month, a survey conducted by Banxico found that private sector analysts had reduced growth forecasts from 1.12% to 1%, and this was down from the bank’s estimate of 1.2% in November.
A 0.6% growth rate would be considerably lower than the 2.3% growth rate projected by the Finance Ministry in its 2025 budget and lower than the 1.5% growth recorded in 2024. It would also be Mexico’s poorest economic performance since 2020, according to the newspaper El Financiero.
In its quarterly report, Banxico said it expects Mexico’s economy to fluctuate between –0.2% and 1.4%, a lower range than projected in November when the Board of Governors predicted a performance range from 0.3% and 2.0%.
Rodríguez said the poor fourth-quarter performance induced a mathematical effect toward a lower base for growth, “reducing the GDP growth forecast.” Additionally, federal budget restrictions will limit the contributions that public spending has contributed toward productive activities in the recent past.
Banxico also cited tariff threats issued by U.S. President Donald Trump, saying this only adds to the uncertainty to Mexico’s economic panorama this year. However, the latest growth forecast does not include estimates related to such future trade-related effects.
“It would be premature to come to any conclusions with regard to such measures,” Rodríguez said.
Just this week, Trump said he may impose 25% tariffs on all auto imports into the U.S. This came just a week after the U.S. president said he might levy 25% tariffs on auto imports from Mexico on top of 25% tariffs on global steel and aluminum imports.
Pamela Díaz, an economist in Mexico with the multinational bank BNP Paribas, said the uncertainty surrounding U.S. trade policy will likely cause private investment to stagnate throughout 2025, with resolution unlikely until next year.
Banxico also mentioned risks for Mexico related to volatility in national and international financial markets while also warning about the possibility of an underperforming U.S. economy.
With reports from El Economista, El Financiero and América Economía
