Introduction
The World Bank recently revised Mexico’s projected growth rate for 2026 down to 1.3% from 1.4%, citing trade tensions and the impending review of the T-MEC agreement. This figure has been echoed by other institutions, including the United Nations and Citibanamex. In 2025, Mexico’s GDP growth stagnated at a mere 0.4%, making the current projections particularly significant.
Growth Projections and Their Implications
The range of growth projections is revealing. Banorte predicts 1.8%, while Scotiabank forecasts a lower 0.6%. The official stance, as per the Secretaría de Hacienda y Crédito Público (SHCP), is a broader 1.8%-2.8%. The common ground lies at 1.3%, with institutions like BBVA and HSBC aligning with this figure. The Organisation for Economic Co-operation and Development (OCDE) estimates 1.2%, while the Economic Commission for Latin America and the Caribbean (CEPAL) matches the 1.3% projection. The International Monetary Fund (IMF) anticipates a range between 1.2% and 1.5%. Many investors have already accepted the 1.3% growth rate.
Impact on Employment in the United States
As the U.S. enters 2026 with jobless growth, the situation warrants attention. After closing 2025 at a 4.4% unemployment rate, the Federal Reserve projects it to remain between 4.4% and 4.5% throughout most of the year. To prevent unemployment from rising, the U.S. needs to create around 70,000 jobs monthly; however, projections suggest a trend between 11,000 and 15,000 jobs. Goldman Sachs warns that this weakness could lead to net job losses, impact consumption, and potentially trigger a recession. The next crucial data point will be the official report released on February 6.
Impact on Mexico’s Job Market
A 1.3% growth rate in Mexico is insufficient to absorb the over 1.2 million young individuals entering the workforce annually. The Instituto Mexicano del Seguro Social (IMSS) projects a 1.7% growth in formal employment, resulting in only 400,000 new formal jobs and leaving 800,000 people in informal or underemployment. Unemployment is expected to remain stable at 3.2%.
Economic Fallout from Low Growth
With subdued growth, tax revenue declines, and public debt pressure increases. Projected at 4.1% of GDP, Mexico’s public debt looms large. On January 1, 2026, the general minimum wage increased by 13% to 315.04 pesos per day, benefiting 8.5 million workers. Real wage growth is anticipated at 3.3%. However, private consumption weakens due to reduced remittances and a 1% tax on physical payment methods (cash, postal money orders, or bank checks). Credit remains expensive, with Banco de México’s interest rates ranging from 7.0% to 8.0%.
Manufacturing Sector Struggles
The manufacturing export sector has suffered, losing over 60,000 jobs between December 2024 and December 2025. Breakdowns by subsector reveal widespread declines: transportation fell 7.4%, machinery and equipment dropped 6.1%, textiles declined by 5.5%, plastics and rubber decreased by 4.2%, and metallic basic industries dipped by 4.0%. The Mexican Automotive Industry Association (AMIA) reported that automotive production fell 0.9% to 3.95 million units.
Pathways to Surpassing 1.3% Growth
To surpass the 1.3% growth rate, Mexico must open its energy sector to investors, ensure certainty and security, and promote nearshoring. Calculations based on INEGI data suggest that drastically reducing extortion and theft against transportation could boost Mexico’s GDP by 1.2 to 2.0 percentage points, resulting in growth between 2.5% and 3.3%. This would render the 1.3% growth rate not only unacceptable but also far from a success.
Key Questions and Answers
- What is the current growth projection for Mexico in 2026? Many institutions, including the World Bank, United Nations, and Citibanamex, project a 1.3% growth rate for Mexico in 2026.
- How does this growth rate impact employment in the U.S.? The U.S. is experiencing jobless growth, with unemployment projected to remain between 4.4% and 4.5%. To prevent rising unemployment, the U.S. needs to create around 70,000 jobs monthly.
- What are the implications of this growth rate for Mexico’s job market? A 1.3% growth rate is insufficient to absorb the over 1.2 million young individuals entering Mexico’s workforce annually, leaving many in informal or underemployment.
- How does low growth affect Mexico’s economy? With subdued growth, tax revenue declines, public debt pressure increases, and private consumption weakens.
- What challenges does Mexico’s manufacturing sector face? The manufacturing export sector has lost over 60,000 jobs since late 2024, with declines across various subsectors.
- What steps can Mexico take to surpass the 1.3% growth rate? Opening the energy sector to investors, ensuring certainty and security, and promoting nearshoring could help Mexico achieve higher growth.
