Mexico's growth forecasts drop amid uncertainty

Mexico City, February 15. The uncertainty and the threat of tariffs from former U.S. President Donald Trump have reduced the growth forecasts for the Mexican economy.

The projections indicate that the economy would grow well below the official expectation of the Government. The most pessimistic estimates even warn of a possible recession or contraction.

The World Bank cut its growth projection for the Mexican GDP in January, reducing it to 1.5% for 2025. Additionally, the private sector consensus fell to 1.07%, according to the first monthly survey of the year by the Bank of Mexico (Banxico).

Possible recession if tariffs are implemented

The main risk factor is the 25% tariffs announced by Trump, which could take effect in March. According to Standard & Poor's (S&P), this measure could cause a recession in Mexico.

Other projections warn of an even more adverse scenario. Banamex estimates a contraction of up to 1.5% if the tariffs remain in place for most of the year, or even 2.2% in a more extreme scenario.

Meanwhile, Moody's reduced its growth estimate to just 0.6%, noting that Mexico would be the most affected country by Trump's trade policies. Bank of America also adjusted its projection to 0.8%.

Projected growth fades

These forecasts are well below the 2.5% estimated in this year's public budget. Despite this, the Ministry of Finance and Public Credit (SHCP) has defended the country's economic outlook.

"Although a moderation in economic growth is expected due to external factors, a recession is not within the forecasts," stated the Secretary of Finance, Rogelio Ramírez de la O, in a call with international investors.

The forecasts have also been adjusted after it was revealed that Mexico's GDP grew by 1.5% in 2024, but fell by 0.6% in the last quarter of the year, marking its first contraction in three years, according to INEGI figures.

Sheinbaum tries to halt tariffs, but Trump insists

The President of Mexico, Claudia Sheinbaum, managed to get Trump to pause the tariffs for a month in exchange for deploying 10,000 National Guard members at the U.S. border.

However, Trump told Fox News that "it's not enough" what Mexico and Canada have done to avoid the tariffs.

Additionally, his administration is preparing 25% taxes on steel and aluminum imports.

Markets on alert amid uncertainty

Trump's stance continues to move the international markets. It is expected that in the coming months his administration will continue to push a protectionist trade agenda.

Analysts and Sheinbaum herself have expressed confidence that the tariffs will not be implemented, due to their impact on inflation in the United States. Nevertheless, the threat is already causing market volatility.

"In any case, the mere threat is already causing a lot of uncertainty," warned economist Sofía Ramírez, director of the organization Mexico, ¿Cómo Vamos?.