Gabriel Casillas, Barclays’ Latin America Chief Economist, Predicts Slower but Steady Growth
Washington, D.C. Mexico’s economy is expected to slow down this year, but the exact figure remains a topic of discussion. Gabriel Casillas, Chief Economist for Latin America at Barclays, anticipates a 0.7% growth in Mexico’s GDP for 2025, which contrasts the market’s average expectation of 0.2%.
Market Expectations and Barclays’ Forecast
Out of 36 participants in Citi’s survey, nine predict a contraction close to the FMI’s current estimate. However, Casillas identifies several factors that could moderate this forecast as the year progresses.
Coordination in Government Spending
Casillas points out that unlike previous administrations, President Claudia Sheinbaum’s government does not face coordination issues in public spending. The team from the Ministry of Finance during the previous administration is now in charge, avoiding a traditional learning curve downward pressure.
Policy Stability and Investor Confidence
He believes that Sheinbaum’s administration will not encounter policy mistakes that deter investors, as seen in past administrations with the cancellation of Mexico City’s new airport or changes to housing subsidy formulas under Enrique Peña Nieto.
Casillas dismisses the judicial reform as a significant error, noting that Sheinbaum has shown more friendliness towards private initiative compared to AMLO.
US Economic Growth and External Demand
Barclays estimates that the US economy will grow by 1.1% in 2025, which, along with Mexico’s projected growth, will generate external demand favoring Mexican manufacturing despite uncertainties.
Monetary Policy and Interest Rates
Casillas expects further interest rate cuts of 50 basis points in May and June, bringing the rate to 8% by mid-year. Two additional cuts of 25 basis points are anticipated in August and September, ending the year at 7.50%.
Despite these reductions, the rate will remain restrictive, which the FMI has linked to subdued economic performance.
Trade and Tariffs
Casillas remains optimistic about North American trade, citing the deep integration of supply chains. He suggests that President Trump might introduce a new security chapter in the trade agreement, ensuring US access to airspace and intelligence in exchange for tariff-free commerce.
Once negotiations begin and the origin rule of content is strengthened, nearshoring—initiated during Trump’s first term—will continue.
Key Questions and Answers
- What is the expected GDP growth for Mexico in 2025 according to Barclays? Barclays predicts a 0.7% growth in Mexico’s GDP for 2025, which contrasts the market’s average expectation of 0.2%.
- What factors support Barclays’ positive outlook for Mexico’s economy? Casillas identifies policy stability, coordination in government spending, and external demand generated by a growing US economy as key factors.
- How does Barclays anticipate the US economy to perform in 2025? Barclays estimates that the US economy will grow by 1.1% in 2025, contributing to external demand favoring Mexican manufacturing.
- What is the projected trajectory of interest rates in Mexico according to Barclays? Barclays expects further interest rate cuts, bringing the rate to 8% by mid-year and ending at 7.50% by year’s end.
- What is Casillas’ outlook on North American trade amidst current uncertainties? Despite uncertainties, Casillas remains optimistic about North American trade due to deep supply chain integration and potential for a new security chapter in the trade agreement.
