Introduction
As is customary at the start of a new year, economic analysts express their expectations. What does this columnist anticipate for 2026? The review and potential renegotiation of the T-MEC will be a dominant event throughout the year. Currently, there is no conclusive sign that the Treaty will come to fruition. Mexico has too many fronts open, weakening its negotiating position.
The final outcome might result in two bilateral treaties instead of one trilateral.
Beyond T-MEC: Persistent Economic Challenges
Apart from the T-MEC renegotiation, there are three significant issues that will not improve in 2026, fostering uncertainty:
- Stagnant Private Investment: Despite cosmetic efforts by the government through Plan México and the Council for Investment Promotion, private investment has not reacted for several years. The judicial reform, the absence of the rule of law, insecurity, and institutional demolition have been significant deterrents to investment and growth.
- Political Noise: Morena will push for an electoral reform of the INE to consolidate the authoritarian regime. In 2026, political parties will prepare for the mid-term election in 2027, the recall referendum, and the second part of the judicial election.
- Economic Mediocrity: The economy will remain trapped in mediocrity, failing to address structural problems (pensions, social spending, health, education, informality, productivity, and infrastructure) or cohort issues (inflation, tax improvement, and government efficiency).
GDP Growth and Inflation Forecast
In line with the analysts’ consensus, modest GDP growth of around 1.3% is expected for 2026. Given the 0.4% growth rate in 2025, the average for 2025-2026 will be close to 0.9%, equal to the average during AMLO’s six-year term, which was the lowest among the past five sexenios. Simultaneously, uncertainty factors predict no improvement in inflation, with a forecasted rate of 3.9%, slightly higher than in 2025.
There is no confidence that the Bank of Mexico can effectively manage these challenges.
Key Questions and Answers
- What is the T-MEC? The United States-Mexico-Canada Agreement (T-MEC) is a trade agreement among the United States, Mexico, and Canada, successor to the North American Free Trade Agreement (NAFTA).
- Why is the T-MEC renegotiation significant? The renegotiation of the T-MEC is crucial as it may result in two bilateral treaties instead of the current trilateral agreement, impacting trade relations among the three countries.
- What are the persistent economic challenges in Mexico? Key issues include stagnant private investment, political noise, and the inability to address both structural problems (pensions, social spending, health, education, informality, productivity, and infrastructure) and cohort issues (inflation, tax improvement, and government efficiency).
- What is the expected GDP growth and inflation rate for 2026? Analysts predict modest GDP growth of around 1.3% for 2026, with an inflation rate forecasted at 3.9%, slightly higher than in 2025.
