Mexico Economic Outlook. June 2026

Summary

We have revised down our 2026 growth forecast to 1.2% (from 1.8% previously), due to weak domestic demand and a prolonged environment of uncertainty. After a weak 2025, formal employment begins to improve. We expect core inflation to resume its downward trend in the second quarter of the year.

Key points

• Key points:
• Mexico is expected to post moderate growth in 2026, amid weaker domestic demand, a gradual slowdown in the labor market, and private investment still weighed down by uncertainty.
• Formal employment growth remains constrained amid rising informality and weaker business dynamism; we forecast growth of 1.4% in 2026 and 2.0% in 2027.
• We forecast headline inflation to end 2026 at 4.1% (+0.2 pp relative to our previous forecast), with core inflation at 3.9%. We expect both to converge to 3.5% in 2027.
• Banxico wrapped up its easing cycle and signaled that it will keep the policy rate at 6.50%—now at the midpoint of the estimated neutral range—at least through year-end.
• We expect a gradual and moderate depreciation of the exchange rate, bringing it to around 17.8 and 18.0 pesos per dollar by the end of 2026 and 2027, respectively.

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