Key Financial Institutions Warn of Slow Growth
Leading financial analysts from Banco Base, Deutsche Bank, Goldman Sachs, UBS, and Pantheon Macroeconomics have collectively warned that Mexico’s economy is currently in a state of stagnation, with projections indicating that this situation may persist into 2026.
Banco Base’s Perspective
Gabriela Siller, the head of economic analysis at Banco Base, cautions that reversing the stagnation is highly unlikely by the end of the third quarter, even with improvements in the agricultural sector due to better weather conditions. The weakening industrial and service sectors cannot compensate for the internal and external risks looming over Mexico.
Banco Base forecasts a 1.07% growth for Mexico’s economy in 2026, driven by consumer spending boosted by the World Cup. However, internal reforms, business environment, and uncertainty surrounding potential changes to the US-Mexico trade agreement prevent any optimistic outlook.
Deutsche Bank’s Projections
From their New York office, Deutsche Bank economists predict a 1.7% GDP growth for Mexico in 2026, which remains far from the pre-pandemic historical average of 2.5%. This growth rate is deemed insufficient for Mexico’s large and needs-driven population.
For 2023, Deutsche Bank projects a 0.4% GDP growth, highlighting the economic weakening and confirming the typical slowdown during a new government’s first year. Factors such as fiscal consolidation, support for the state-owned oil company, and uncertainty around US trade policy changes towards Mexico contribute to this slowdown.
UBS’s Focus on Institutional Reforms
UBS analysts emphasize recent institutional reforms, particularly the Amparo Law, which has raised concerns about respect for the rule of law and regulatory predictability. These factors are crucial as Mexico prepares to renegotiate the USMCA in 2026.
Should Mexico maintain fiscal prudence and strengthen institutional certainty, UBS believes the country will be well-positioned to benefit from the next phase of North American integration.
Key Questions and Answers
- What is the current state of Mexico’s economy according to analysts? Mexico’s economy is currently in a state of stagnation, with analysts predicting this situation may persist into 2026.
- What growth rates are analysts forecasting for Mexico’s economy in 2026? Analysts from Banco Base predict a 1.07% growth, while Deutsche Bank anticipates 1.7%. Both rates are significantly lower than the pre-pandemic average of 2.5%.
- What factors are contributing to the slow growth projections? Internal reforms, business environment, uncertainty around trade policy changes, fiscal consolidation, and support for the state-owned oil company are key factors hindering robust economic growth.
- How do recent institutional reforms in Mexico impact future growth prospects? Recent reforms, such as the Amparo Law, have raised concerns about regulatory predictability and respect for the rule of law. If Mexico can address these concerns, it will be better positioned to benefit from North American integration.
