Mexico’s Slow Growth in a Rapidly Expanding World Economy
According to the Organisation for Economic Co-operation and Development (OECD), Mexico is projected to grow by 0.8% in a year when the global economy is expected to expand by 3.2%. This translates to the world’s economy growing four times more than Mexico’s in that same period.
Contextualizing Mexico’s Growth
Mexico’s 0.8% growth signifies a new normal of modest expansion, making it one of the slowest-growing countries post-pandemic. While some might celebrate this figure, arguing that GDP isn’t the only measure of a nation’s health, it still lags behind the OECD’s June projection of 0.4%. Moreover, this growth rate aligns with the average annual performance of the previous six-year term, which was below 1%.
Government Policies and Private Investments
In 2025, the Mexican government committed to reducing public finance deficits and cut public investments by 22.4% in the first half of the year. Simultaneously, the private sector reduced its investments by 4.8%. Reasons for this include the early stages of the six-year term, global economic uncertainties, caution regarding judicial reform, and increased fiscal pressure.
The second half of 2025 is expected to be more challenging due to the impact of protectionist measures from the United States, as per the OECD’s warning. The improved projection for Mexico in 2025 is attributed to a better-than-expected first half. However, the growth for 2026 is still projected to be only 1.3%, far behind the global average of 2.9%.
Global Economic Trends
The OECD report confirms that Asia will continue to be the region with the highest growth. China is on track to grow by 4.9%, slightly less than the 5.0% growth in 2024 but sufficient to solidify its position as the world’s second-largest economy. Although China’s nominal GDP is still far behind that of the United States, the gap is narrowing as the U.S. economy grows at 1.8% in 2025 and 1.5% in 2026.
Impact of Trump’s Policies
The OECD report subtly hints at the implications of Trump’s policies, known as “Trumpomics,” on the U.S.-China economic race. Both nations will experience a reduction in GDP growth rates, but the U.S. will see a more drastic decline compared to China. The report warns about the risks associated with stricter immigration policies alongside tariffs, predicting increased inflation and slower growth.
India’s Rising Economic Stature
India is establishing itself as a major economy with robust growth. After recording a GDP of 6.5% last year, India aims for a slight increase to 6.7%. This growth occurs despite the 50% tariffs imposed by the U.S. on India due to its purchase of Russian oil. Although these tariffs have led to a significant drop in Indian exports to the U.S., India has compensated through sales to other countries and domestic market growth, supported by a population of 1.463 billion—almost 18% of the global population.
Though it may sound unusual to place India among the world’s largest economies, its nominal GDP has recently surpassed Japan’s, placing it fourth. If current projections for 2025 and 2026 hold, India will surpass Germany early in 2027 and become the third-largest economy globally.
Europe’s Declining Economic Influence
In this “strange new world,” Europe is losing prominence and momentum, both geopolitically and economically. The eurozone is projected to grow by 1.2% in 2025 and 1.0% in 2026, according to the OECD. The three largest European economies—Germany, France, and Italy—are expected to perform modestly. Notably, Spain is projected to grow by 2.6% in 2025, raising questions about the role of Mexican talent and investments in this growth.
The world is moving much faster than Mexico, with a 3.2% global growth rate compared to Mexico’s 0.8%. This stark contrast underscores the urgent need for Mexico to accelerate its growth or accept being a ‘giant’ only when compared to Central American nations.
Key Questions and Answers
- What does Mexico’s 0.8% growth mean? It represents a new normal of modest expansion, making Mexico one of the slowest-growing countries post-pandemic.
- How are government policies and private investments affecting Mexico’s growth? The Mexican government has committed to reducing public finance deficits and cutting public investments, while the private sector has also reduced its investments.
- What are the global economic trends highlighted by the OECD report? Asia, led by China, is projected to have the highest growth rates. The U.S. and China will experience reduced GDP growth due to Trump’s protectionist policies.
- What is the impact of Trump’s policies on the U.S.-China economic race? Both nations will see a reduction in GDP growth rates, with the U.S. experiencing a more drastic decline due to stricter immigration policies and tariffs.
- How is India’s economic growth performing? Despite U.S. tariffs, India aims for a 6.7% GDP growth, supported by domestic market growth and sales to other countries.
- What is Europe’s economic outlook according to the OECD? Europe, particularly the eurozone, is projected to have modest growth rates, with Germany, France, and Italy performing below expectations.
