Banxico Optimistic but Cautious Amid Global Trade Tensions

The Bank of Mexico revised its economic growth forecast for 2025, adjusting it to 1.6% from the previous 1.1%. Despite some optimism, global trade tensions and the upcoming review of the USMCA deal raise concerns. Inflation is also expected to rise, adding complexity to Mexico's economic outlook.

The Bank of Mexico has revised its growth forecast for the nation's economy, projecting a slight increase to 1.6% for 2025, up from November's estimate of 1.1%. The central bank, known as Banxico, released its updated outlook on Thursday, reflecting cautious optimism amid persistent global trade tensions.

Banxico's revised estimates come as Mexico prepares for the upcoming United States-Mexico-Canada Agreement (USMCA) review, scheduled for July. The potential impact of trade tensions and geopolitical conflicts remains a significant concern for the bank. Private consumption is expected to rise, but investment may stay subdued until at least the second half of 2026, given uncertainties surrounding the trade relationship with the U.S.

Despite these challenges, Banxico considers deeper North American economic integration as potentially beneficial. Inflation shows an upward trend, with projections for the fourth quarter of 2026 raised to 3.5% for annual inflation and 3.4% for core inflation. These updates were part of Banxico's latest monetary policy decisions announced on February 5.

(With inputs from agencies.)