LatinNews Daily - 29 May 2025

*Mexico’s central bank (Banxico) has released its quarterly report for the first quarter of 2025 in which it significantly reduces its 2025 GDP growth forecast to 0.1%, citing a range of -0.5%-0.7%, down from 0.6% in its previous quarterly report released in February when the range was -0.2%-1.4%. Banxico also cuts its GDP growth forecast for 2026 to 0.9% citing a range of 0.1%-1.7%. This is down from 1.8% in its previous forecast when the range was 1.0%-2.6%. In its report, Banxico highlights that the Mexican economy is “undergoing a period of marked weakness and faces challenges”. It cites the “growing level of uncertainty due to policies announced by the US which could have profound changes in international trade and the global economy”, noting that this uncertainty in itself makes investment-related decisions difficult and “has adverse effects on the business climate”. Banxico also highlights specific measures already implemented such as President Donald Trump’s imposition of tariffs on foreign imported goods in April, which received a judicial setback yesterday in the US, although noting the preferential treatment Mexico has received in relation to US tariffs under the US-Mexico-Canada Agreement (USMCA). Banxico governor Victoria Rodríguez Ceja was cited by the media however as saying that the bank is foreseeing “a period of economic stagnation but not a recession.” Banxico also forecast that inflation, which averaged 3.7% in the first quarter of 2025, would take longer to slow, predicting that this would reach 3.9% in Q2 2025 and 3.5% in Q3 2025, compared with its previous estimates of 3.5% and 3.4% respectively. However, it maintained prior forecasts of 3.3% inflation in Q4 2025 before reaching its 3.0% target in the third quarter of 2026.

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