Mexico GDP outlook falls again in March survey

: Crude oil, LPG, Metals, Oil products
25/04/01

Private-sector analysts lowered Mexico's 2025 GDP growth forecast to 0.5pc in the central bank's March survey, down by more than a third from the prior forecast, driven by increased concerns over US trade policy and weakening domestic investment.

The latest outlook is down from 0.8pc estimated in February and marks the largest of four consecutive reductions in the median forecast for 2025 GDP growth in the central bank's monthly surveys since December.

Mexico's economy decelerated in the fourth quarter of 2024 to an annualized rate of 0.5pc from 1.7pc the previous quarter, the slowest expansion since the first quarter of 2021, according to statistics agency data.

Uncertainty over US trade policy has weighed on investment and contributed to the slowdown. Concerns have intensified in recent weeks with US president Donald Trump set to announce sweeping new tariffs on 2 April. Mexico is preparing its response, possibly including reciprocal tariffs, on 3 April.

A key concern in Mexico is an expiring carveout to the tariffs for treaties aligned with US-Mexico-Canada (USMCA) free trade agreement rules of origin. Mexico's economy minister said last week ongoing negotiations aim to secure a "preferential tariff," including a continuance of that exclusion and lower tariffs for goods progressing toward USMCA compliance.

The median 2026 GDP growth estimate fell to 1.6pc from 1.7pc in February. Analysts again cited security, governance and trade policy as top constraints to growth.

Year-end 2025 inflation expectations edged lower to 3.70pc in March from 3.71pc in February. The central bank's board of governors cut Mexico's target interest rate by 50 basis points to 9pc from 9.5pc on 27 March, citing expectations that inflation will continue to slow toward the central bank's 3pc long-term goal and reach 3.3pc by year-end. The board said it would consider additional cuts of that size at future meetings.

Mexico's consumer price index accelerated to an annual 3.77pc in February, as slower growth in agricultural prices was offset by faster inflation in services.

The target interest rate is projected to fall to 8pc by year-end, compared with 8.25pc in February's survey.

The median exchange rate forecast for end-2025 reflected expectations of the peso ending the year slightly stronger at Ps20.80 to the US dollar from Ps20.85/$1 estimated in the prior forecast. The end-2026 estimate firmed slightly to Ps21.30/$1 from Ps21.36/$1.

By James Young

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