The central bank of Mexico has raised its GDP forecast for 2026, taking into account "better-than-expected growth" in the last quarter of 2025, although uncertainty remains around trade negotiations between the United States, Mexico and Canada (USMCA).
Banksico raised its growth forecast for 2026. doBank referred to the revised estimate of the Inegi statistical agency for GDP growth in the fourth quarter of 2025 to 1.8% year-on-year from 1.6% in its preliminary estimate, while growth in the agricultural sector was revised up to 7.8%, compared with a preliminary estimate of 6%.
"Looking ahead to 2026, we continue to expect some acceleration in economic growth, although a sluggish situation is expected to prevail," central bank governor Victoria Rodriguez said in the latest quarterly report dated February 26.
This suggests that "private consumption will increase," Rodriguez said, while "investment is projected to remain weak reflecting the prevailing uncertainty surrounding trade relations with the United States and the upcoming revision of economic growth."[USMCA free]trade agreement."
The United States, Mexico and Canada are going to hold a joint review on July 1, which could extend the agreement until 2036. Formal negotiations began in September, and although some stages have been completed, key issues remain unresolved.
On February 5, Banxico kept its benchmark interest rate at 7%, the lowest level since June 2022, suspending the rate reduction cycle after eight consecutive cuts that began in February 2025.
The bank's quarterly report dated February 5 left unchanged forecasts for general and core inflation, which converge with the bank's 3% inflation target for both indicators by the second quarter of 2027, three quarters later.than the bank's forecast in its November report.
Despite the recent pause in rate cuts, "We will consider further reductions in the benchmark interest rate in the future," Rodriguez said, referring to the recent strengthening of the Mexican peso's exchange rate against the U.
S. dollar, which was trading at Ps17.21:1 U.
S. dollars as of February 27.
In a report, Mexican bank Banorte confirmed expectations that Banxico will announce a quarter-point rate cut at its March 26 meeting, with a possible further cut.until July to bring the rate up to 6.5%.
Inflation in Mexico accelerated to 3.79% year-on-year in January from 3.69% in December, while base prices accelerated to 4.52% in January from 4.33% in the previous month due to the increase in excise tax imposed on January 1.
