Mexico's Economic Turmoil: On the Brink of Recession

Mexico's economy is expected to face a contraction in the first quarter, potentially entering a technical recession exacerbated by U.S. tariffs. President Claudia Sheinbaum faces the challenge of managing growth despite high budget deficits and investor concerns amid trade uncertainties and political issues.

Mexico's economy is on the verge of a downturn, as analysts predict a contraction in the first quarter, culminating in a technical recession intensified by erratic U.S. tariff policies under President Trump. The economic slowdown compounds existing woes, including drought aftermath and political uncertainties.

President Claudia Sheinbaum, amidst high approval ratings, is grappling with fiscal constraints inherited from predecessors, notably the highest budget deficit since the 1980s. Despite these challenges, she contests the need for significant fiscal reform, aiming to preserve current welfare levels while boosting domestic investment.

U.S. trade policies pose further challenges, with Trump imposing tariffs on Mexican imports, complicating Mexico's economic recovery efforts. The government hopes to increase USMCA-compliant exports, but the prolonged uncertainty threatens to stall growth, fuel investor concerns, and deepen the regional recession risk across North America.

(With inputs from agencies.)