BBVA Research

Mexico's construction sector shows a recovery in 1H26, driven by civil works and building. Despite high costs and limited credit, a positive trend is expected. The housing market is stabilizing, although affordability remains the main challenge, marked by significant regional imbalances.

Exports are set to reach a record high in 2026, consolidating their role as a key driver of economic activity and supporting exchange rate stability. The country is expected to achieve three consecutive years of growth by 2027, amid declining but persistent inflation and highly uneven sectoral performance.

The Spanish economy will maintain solid growth of 2.6% in 2026 and 2.1% in 2027, supported by employment, consumption and services. Higher energy costs, inflation and interest rates will weigh on activity, while structural challenges to growth persist.

El Niño 2026–27 could be exceptional, but its impact will not depend on intensity alone: local climate conditions, timing, and sectoral exposure will be key. Granular analysis can help anticipate risks, while adaptation can mitigate their effects

We have revised our 2026 growth forecast upward to 1.4% (from 1.2% before); we anticipate that the gradual recovery of domestic demand will sustain the pace of expansion. Following a weak 2025, formal employment is beginning to improve. We expect core inflation to resume its downward trend in the second quarter of the year.

Brazil’s economy is slowing: growth is expected to reach 2.1% in 2026 and 1.8% in 2027. Supply-side pressures will push inflation higher, but weak demand will likely allow for further Selic rate cuts. The post-election political landscape will shape the outlook and the balance of risks.

The Chinese economy slowed to 4.3% in Q2 2026 due to domestic risks such as a supply-demand mismatch, weak consumption, and a housing crisis. The GDP growth forecast is maintained at 4.5% for 2026 and 4.2% for 2027, and the CPI forecast is lowered to 0.8%.

Colombia’s economy will grow 2.6% in 2026, ease to 2.3% in 2027, and rebound to 3.1% in 2028. The 2027 slowdown will be temporary as growth shifts from public to private-sector support, which will strengthen in 2028. Fiscal imbalances and inflation remain the key challenges ahead.

The Turkish economy grew by 2.3% y/y in 2Q26, below both our expectation (3%) and market consensus (2.9%), bringing growth in 1H26 to 2.5% y/y. Assuming a prudent policy mix going forward and no further escalation in geopolitical tensions, we maintain our 3.0% GDP growth forecast for 2026 with limited downside risks now.

Mexico's current account recorded a surplus of USD 8.9 billion in 2Q26, driven by a record high in the non-oil merchandise balance. In contrast, Net Foreign Direct Investment (FDI) showed an annual decrease of 11.7% during the first half of 2026.