The Organization for Economic Co-operation and Development (OECD) has cut its 2025 and 2026 growth forecasts for the Mexican economy.
The Paris-based organization predicts that Mexico’s GDP will increase 0.7% this year and 1.2% in 2026. The OECD’s latest forecasts for this year and next are both 0.1 percentage points lower than its predictions in the Economic Outlook, Interim Report published in September.
In the December Economic Outlook report published on Tuesday, the OECD also included a forecast that the Mexican economy will grow 1.7% in 2027.
The OECD’s adjustment to its 2025 forecast came after Mexico’s national statistics agency INEGI reported in late November that the Mexican economy grew 0.4% in the first nine months of the year. The Bank of Mexico (Banxico) subsequently cut its 2025 growth forecast for the Mexican economy to 0.3% from a previous prediction of 0.6%.
The OECD’s forecast for 2026 is slightly above Banxico’s 1.1% prediction, but well below the 2.3% projection included in the Mexican government’s 2026 budget documents.
‘Economic activity has weakened’
The OECD explained the rationale for its lower 2025 forecast for the Mexican economy in the Mexico section of its latest Economic Outlook report.
“After remaining resilient during the first half of 2025 despite heightened global uncertainty, economic activity has weakened, with GDP contracting by 0.3% in the third quarter (seasonally adjusted),” the OECD wrote.
Bank of Mexico slashes 2025 economic growth forecast to 0.3%
The organization also noted that “private consumption is moderating in line with a slowdown in formal job creation, particularly within the manufacturing sector.”
“Automotive exports have weakened, whereas non-automotive manufacturing exports have been resilient so far, supported by solid demand from the United States. Private investment continues to be subdued, reflecting high uncertainty,” the OECD added without acknowledging that foreign direct investment hit a record high in the first nine months of 2025.
‘Modest’ growth in 2026 and 2027
The 1.2% forecast expansion for the Mexican economy next year and the 1.7% increase in GDP predicted for 2027 would represent “modest” growth, according to the OECD.
Still, such growth rates would represent significant improvements from the weak performance of the Mexican economy in 2025.
The OECD wrote that “private consumption will be supported by low unemployment and declining inflation” in the next two years.
Mexico’s unemployment rate was just 2.6% in October, while inflation ticked up to 3.61% in the first half of November. Banxico forecasts that inflation will reach its 3% target in the third quarter of 2026, and remain at that level into 2027.
Among the OECD’s other predictions for Mexico in 2026 and 2027 are that:
- Private investment will gradually benefit from lower interest rates, though it will remain constrained by high domestic and global uncertainty.
- Public investment will remain subdued as part of efforts to reduce the fiscal deficit.
- Export growth will be dampened by trade tariffs and high global uncertainty.
The OECD said that “a swift and successful renegotiation” of the USCMCA trade pact between Mexico, the United States and Canada in 2026 could help to reduce uncertainty and thus “support investment and exports more strongly than currently anticipated.”
How does Mexico’s projected growth compare to the forecasts for the US and Canada?
According to the OECD, economic growth in the United States and Canada will outpace Mexico’s GDP expansion in 2025 and 2026.
The OECD is predicting a 2% expansion in the U.S. this year and 1.1% growth in Canada.
In 2026, it forecasts that the U.S. economy will expand 1.7% and the Canadian economy will grow 1.3%, just above the predicted expansion of the Mexican economy.
The OECD anticipates 1.9% growth in the U.S. in 2027, and 1.7% in Canada — on par with the forecast for Mexico.
Growth in Mexico is dependent to a significant extent on growth in the United States, the world’s largest economy. Mexico and the U.S. are each other’s largest trade partners and the economies of the two countries are highly integrated.
The OECD forecasts that the global economy will grow 3.2% this year, 2.9% in 2026 and 3.1% in 2027. It anticipates 1.7% growth across the 38 OECD countries in 2025 and 2026, before a slight increase to 1.8% in 2027.
With reports from El Economista
