2026/01/26 | Julia Passabom, Mariana Ramirez & Ignacio Martínez
According to INEGI, the first estimate of Mexico’s GDP for the fourth quarter of 2025 showed an annual growth rate of 1.6%, above Bloomberg market expectations of 1.3%. Sequentially, activity expanded by 0.8% quarter-on-quarter SA, also above the market median of 0.6%. As a result, economic activity in 2025 would have closed with an overall growth of 0.6%, above our forecast of 0.3%, though still well below Mexico’s estimated potential growth. The Carry-over effect for 2026 sits now at 0.57%. Across sectors, all components recorded positive annual growth. Agriculture posted a robust 6% year-on-year expansion, while secondary activities grew by 0.3% and tertiary activities by 2%.
Our take: Looking ahead, these results suggest a more favorable outlook for economic momentum, where we expect Mexico to continue on a gradual path toward its potential growth rate. For 2026 and 2027, we forecast GDP growth of approximately 1.5% and 2.0%, respectively. These figures also imply a narrowing negative output gap—an important consideration for Banxico’s monetary policy calibration, as the output gap remains one of the key channels supporting disinflation this year. For the February 5th meeting, we continue to expect Banxico to keep the policy rate unchanged at 7%, favoring a wait‑and‑see approach. The central bank will likely want to closely monitor the temporary uptick in inflation stemming from one‑off shocks, such as tariff and tax adjustments, as well as evaluate whether inflation dynamics and expectations remain on track to converge toward the 3% target over the forecast horizon.
