Mexico Economic Outlook. September 2025

Summary

Domestic demand continues to slow; private consumption fell (-)0.1% as of June (YoY, cum.), while investment contracted (-)6.4%. We revise our 2025 growth forecast upward to 0.7%, supported by the favorable performance of the economy in 1H25, although expectations point to a slowdown in the second half of the year.

Key points

• Key points:
• The front-loading of exports provided a temporary boost to growth in 1H25; weaker industrial employment and subdued investment amid prolonged uncertainty point to softer momentum in 2H25.
• Formal employment remains stagnant; the rebound from the incorporation of digital workers was merely statistical and did not involve the creation of new jobs. Growth of 0.8% is expected in 2025.
• We expect that, with weak demand, services inflation will tend to moderate. We anticipate that headline inflation will end the year at 3.8% and reach 3.5% in 2026.
• Banxico still has room to continue normalizing its monetary policy stance amid weak domestic demand and the Fed’s shift in the balance of risks.
• The 2026 Economic Package: fiscal consolidation is set to continue.

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