Introduction
On Tuesday, April 22, Mexico woke up to disheartening economic news. The International Monetary Fund (IMF) projects that Mexico will enter an economic recession in 2025, with a projected GDP growth rate of -0.3%.
IMF’s Downward Revision of Mexico’s Growth Projection
The IMF has revised downward its growth projections for most countries worldwide due to the negative impacts of tariffs imposed by Donald Trump’s administration. Among these countries, Mexico is the only one with a contraction projection.
Originally, the IMF forecasted a 2.0% growth rate for Mexico in 2026, but it has since revised this to 1.4%. This adjustment is the most significant among all countries listed in the IMF’s economic projections.
Global Economic Slowdown
The IMF has reduced its global growth projection by 0.5 percentage points, from 3.3% to 2.8% for this year and to 3% for the following year, 2026. These projections are far from its January estimate of a 3.3% growth rate for the subsequent two years.
The IMF observes a slowdown in economic growth across the globe, affecting all regions including the United States, the Eurozone, China, and other parts of the world.
Although the IMF does not predict a recession in the United States, the likelihood of occurrence has increased from approximately 25% to 37%.
Consensus Among Analysts
A majority of analysts agree that a combination of external and internal factors is pushing Mexico’s economy towards a recession. These factors include:
- 1. US tariffs
- 2. Change in government and the learning curve associated with it
- 3. High fiscal deficit and commitment to reduce it from nearly 6% to 3.9%
- 4. Slowdown in indicators such as fixed capital investment and private consumption
- 5. Judicial Reform, among other reforms causing uncertainty among investors
However, there is a glimmer of hope: the possibility that tariffs will have a short lifespan and Mexico can capitalize on investments relocating within its territory due to the US-China conflict.
Moreover, the plans and programs being developed and implemented by President Claudia Sheinbaum’s government aim to advance trade negotiations and support strategic sectors.
By the end of this month, it will be clear whether Mexico has entered a recession phase.
Key Questions and Answers
- What does the IMF projection mean for Mexico? The IMF’s negative growth projection for Mexico in 2025 indicates a potential economic recession, driven by factors such as US tariffs, fiscal deficit, and slowing investment.
- Why is Mexico the only country with a recession projection? Unlike other countries, Mexico faces a unique combination of challenges, including high US tariffs, government transition, fiscal deficit, and slowing investment indicators.
- What are the potential positive outcomes? There’s a possibility that short-term tariffs could lead to increased investments in Mexico, and the government’s ongoing efforts in trade negotiations and sector support might mitigate the recession risk.
AMIB Annual General Meeting
Brief Note:
The Annual General Meeting of Associates for the Mexican Securities Association (AMIB) is approaching. According to well-informed sources, Álvaro García Pimentel is expected to be re-elected as the director for the 2025-2026 term.
AMIB represents 36 brokerage firms operating in Mexico and has 30 fund investment operators, two limited fund investment operators, three money brokers, and one independent investment advisor as affiliates.
García Pimentel has played a pivotal role in the development of Mexico’s stock market, with an impressive increase in account numbers due to democratization of investments. The new Securities Market Law is anticipated to usher in a new era with greater growth among minority investors and custodied assets.
