Reuters poll sees mild stagflation for Mexico in 2026
Analysts predict Mexico will see 1.5% growth in 2026 while inflation stays near 4%. Trade uncertainty and energy prices continue to impact the economy.
Mexico is projected to experience a period of mild stagflation throughout 2026, as trade uncertainty and persistent inflationary pressures weigh on the region's second-largest economy. According to a Reuters poll of economists conducted in Argentina and other regional hubs, the nation is set for its third consecutive year of growth below 2%, while inflation remains near the upper limit of the central bank's target.
The median estimate from 35 analysts indicates that gross domestic product will expand by 1.5% this year, an improvement from the 0.6% growth recorded in the previous period. Looking ahead to 2027, the growth forecast remains stable at 1.9%. While some analysts at GRUPO FINANCIERO BANORTE-O expressed optimism regarding the potential economic boost from the football World Cup and increased public investment, the broader consensus remains cautious.
Inflationary concerns continue to influence the economic landscape, with average annual forecasts rising to 4.0% for the current year. This trend is partly attributed to global energy market volatility linked to geopolitical tensions involving Israel and Iran. The central bank of Mexico is expected to conclude its long-standing easing cycle this quarter with a final 25 basis-point interest rate cut to 6.50%. Market participants are also closely watching the USD/MXN exchange rate as a key indicator of economic sentiment.
The most significant headwind remains the future of the trade agreement with the United States and Canada. Economists have outlined various scenarios for the USMCA, with the most favorable being a straightforward ratification of the existing framework. However, Rodolfo Mitchell, head economist at Scotiabank Mexico, warned of more challenging outcomes.
"The worst-case scenario would be a formal renegotiation of the treaty since Mexico has very limited room for negotiation and would probably end up accepting most of the changes proposed by the U.S., Mitchell said."
Alfredo Coutino, a director at MOODY'S CORP, noted that while an agreement past the July deadline is likely, the negotiation process will be characterized by significant friction.
"However, the negotiations will be marked by back-and-forth, friction, and threats of termination by the U.S. all with the intention of obtaining the best advantages and largely to impose its demands, Coutino said."
