The Mexican economy fell into a technical recession at the end of March 2025, which focuses on registering an annual growth of 0.2 percent, the worst performance among a dozen Latin American countries monitored by CITI, according to what the institution’s economists foreseen.
The country’s economy accumulated two consecutive quarters with setbacks at the end of the third month of the yeartoday that it is estimated that GDP decreased 0.4 percent from January to March, while in the fourth quarter of last year 0.6 percent, said Julio César Ruiz, chief economist for Mexico of Citi, at a press conference.
He added that Citi foresees that the country’s economy will grow 0.2 percent the second quarter and 0.4 percent during the third and fourth quarter of 2025, so that the GDP would average a growth of 0.2 percent throughout the year of 2025.
He explained that the 0.2 percent growth forecast for this year coincides with that projected by analysts surveyed by CITI.
“Behind these cases is the deceleration of the United States economy. We expect 1.1 percent growth and consensus foresees by 1.7 percent. The second factor that affects the planned growth of 0.2 percent of GDP in Mexico is uncertainty, which is affecting the investment, ”he said.
Mexico will have the worst economic growth in Latin America
Felipe Juncal, economist for Mexico and Latin America for Citi, stressed that the country’s GDP will record the worst performance between 12 economies of the subcontinent that monitors the institution.
Among which Argentina, Brazil, Chile, Colombia, Peru, Dominican Republic, El Salvador, Costa Rica and Panama stand out.
He explained that for this year Argentina will lead growth in Latin America With a 5 percent advance and the region’s average GDP progress will be 2.2 percent.
“Let’s endorse our investment contraction forecasts for 2025 of 0.8 percent,” he added.
The specialists detailed that the main winds against the Mexican economy this year will be Trump’s tariffs, today that estimate an effective tariff of 7.3 percent.
Another point of uncertainty is the review of the T-MEC scheduled for mid-2026, which is another source of uncertainty and if its review would be advanced it would be good news to mitigate the restlessness.
Las Reforms to the Judiciary They are another factor that pays uncertainty in Mexico; Until 2026 we will know how the Judiciary will work.
Another wind against is fiscal consolidation, since the extended deficit of 5.7 percent to a range of 3.9 to 4 percent must be reduced.
It will be complicated because growth expectations have been deteriorating in recent months, we estimate a fiscal deficit of 5.3 percent of GDP.
Our general inflation forecasts is 3.9 for 2025 and 3.7 by 2026 and the underlying of 3.7 percent by 2025 and 3.6 percent the following year.
Julio Ruiz commented that a weak economic activity and well -behaved inflation continue to give space for the Bank of Mexico to continue decreasing its interest rate. In fact, the Banxico rate is still very restrictive and makes no sense to continue to be so, if inflation is slowing down.
There would be enough space to continue cutting in 2026 for what we estimate for the closure of 2026 a rate of 6.25. They calculated five Fed rate cuts by 2026 leaving the rate at 3.25 percent.
On the other hand, Felipe Juncal estimated that in 2024 the gross remnant of operation of Banxico It was 3 points of GDP, but of this, it must allocate 2 points of GDP to compensate losses of previous exercises.
He calculated that the remnant that Banxico would transfer to the government would be 0.5 percent of GDP, equivalent to 175 billion pesos, since the Central Bank could be reserved 0.5 percent of GDP. With the transfer, the government fiscal deficit could be 4.5 percent of GDP.
