According to the latest monthly survey by Mexico’s central bank (Banxico), private sector analysts in the country forecast a more challenging economic environment for 2025, with lower GDP growth and higher inflation.

Next year, analysts forecast that GDP will increase by 1.78%, slightly lower than the 1.80% anticipated in the previous survey. They also expect inflation to reach 3.76%, marginally higher than last month's outlook of 3.71%.

While private analysts revised down their inflation expectations for this year from 4.27% to 4.23%, they now anticipate the country’s economy to grow by 2.00%, down from the previously forecast 2.10%, bnamericas reports.

According to the economists, the general factors that could hinder Mexico's economic growth in the next six months include governance, cited by 56% of respondents, and internal economic conditions, mentioned by 18%.

Specifically, they highlight internal political uncertainty (18%), issues with public insecurity (14%), other concerns related to the lack of rule of law (10%), the absence of structural reforms in Mexico (8%), and corruption (8%) as significant factors impacting the country's economic outlook.

“A more difficult environment is expected in 2025, with higher inflation and lower economic growth,” said economist Gabriela Siller, director of economic analysis at Grupo Financiero Base.

In addition, the central bank survey revealed that analysts now forecast the exchange rate to reach 18.73 Pesos per Dollar by the end of this year, with the interest rate expected to be 10.25% by the end of the year.

They anticipate that the monetary authority will reduce the benchmark rate by approximately 75 basis points in the second half of the year. In May, their forecast had suggested a potential rate cut of up to one percentage point for the entire year.

Last week, the central bank's governing board decided to maintain the interest rate at 11%, citing ongoing inflationary pressures and market uncertainty.

Whereas for 2025, economists forecast an exchange rate of 19.36 Pesos per Dollar and a reference interest rate of 8.25%.