The Bank of Mexico lowered its growth forecast for Mexico’s economy to nearly zero and increased its short-term inflation predictions.
In its third-quarter report, Banxico projected GDP growth of only 0.3% for this year, down from 0.6% previously. It kept its 1.1% growth outlook for 2026 and forecasted 2.0% for 2027.
Banxico attributed the lower growth estimate to poorer-than-expected third-quarter performance, with GDP shrinking by 0.3%, driven by declining industrial output and weaker auto exports to the U.S. amid trade tensions.
The announcement arrives as Mexico continues to face global trade uncertainties, with Banxico’s board making its 11th consecutive rate cut November 6, lowering it by 25 basis points to 7.25%, the lowest since May 2022.
During a presentation of the bank’s quarterly report, Banxico Governor Victoria Rodriguez stated, “Continuing with our cycle of cuts is consistent with the inflation outlook, with the even wider degree of slack that the national economy is showing.”
In Banxico’s report, the Board’s analysis read: “World economic activity is expected to have expanded during the third quarter of 2025 at a lower rate than in the previous quarter, in a context of persistent uncertainty associated with trade tensions.”
“Regarding economic activity in Mexico, during the third quarter of 2025 GDP contracted relative to the previous quarter. From a sectoral perspective, this performance reflected a fall in industrial production that was partially offset by an expansion in primary activities and a slight increase in tertiary activities.”
“Given the weakness that economic activity has shown for several quarters, slack conditions prevailed. In this context, the main labor market indicators continued exhibiting signs of cooling. Looking ahead, productive activity is expected to remain sluggish, reflecting the complex global economic environment.”
Banxico projects inflation will hit the 3% target by the second half of next year.
By CEO NA Editorial Staff
