Mexico's association of finance executives IMEF lowered its 2025 growth forecast for a fourth consecutive month, citing the growing impact of US tariffs on the economy.
GDP is now expected to grow just 0.1pc in 2025, according to IMEF's May survey, down from 0.2pc estimates in April, 0.6pc in March and 1pc in February. The number of respondents forecasting a contraction in GDP rose to 16, or 37pc of the sample, from nine in April.
While the US has granted some exemptions and discounts for Mexican goods meeting regional content rules, IMEF said the effective tariff rate on Mexican exports remains higher than that for Canada, Brazil, India, Vietnam and others.
"We're already seeing the [tariffs'] impacts," said IMEF economic studies director Victor Herrera, adding that May trade data will likely show a sharp drop in Mexican exports to the US.
Trade is also being hit by a screwworm outbreak in cattle that led to port closures last week and curtailed beef exports, which account for $1.3bn in annual exports.
More automakers could relocate or scale back production in Mexico, Herrera said, after Stellantis confirmed plans to shift some operations to the US and recent reports Nissan may close one or both of its Mexican plants.
In response, Mexico this week sent deputy economy minister Luis Rosendo Gutierrez to Tokyo to meet with Mazda, Nissan, Toyota and Honda executives.
IMEF cut its 2025 job creation forecast to 200,000 in May from 220,000 in April. Mexico's social security administration IMSS reported only 43,500 new jobs over the past 12 months as of 5 May.
Beyond trade, IMEF flagged uncertainty from recent constitutional reforms and the potential for a US tax on remittances as additional risks to growth.
The group held its 2025 inflation forecast steady at 3.8pc, despite Mexico's consumer price index rising to 3.93pc in April from 3.80pc in March.
IMEF noted concerns about a potential rebound in inflation later this year after the central bank cut its benchmark interest rate by 50 basis points to 9pc on 8 May — the third such cut in 2025. The group now sees the end-2025 rate at 7.75pc, down from 8pc previously.
IMEF expects the peso to end the year at Ps20.80/$1, slightly lower than the Ps20.90/$1 forecast in April. The peso recently strengthened to Ps19.34/$1, though Herrera said this reflected dollar weakness more than peso strength.
