The International Monetary Fund (IMF) has revised Mexico’s 2025 growth outlook upward to 1%, compared with its earlier forecast of 0.2%, and expects the economy to expand by 1.5% in 2026.
In its Article IV concluding statement on Mexico, the IMF highlighted that fiscal tightening, strict monetary policy, and trade frictions with the United States have dampened consumption and investment, though exports have held up well.
It added that stronger US demand and greater certainty on tariffs present potential upside risks.
The IMF advised Mexico to steer clear of trade-distorting policies, including the recently imposed import tariffs, in order to support sustained growth.
“Expanding and diversifying partnerships with trading partners would further strengthen Mexico’s position in global supply chains,” the report stated.
According to the IMF, Mexico’s long-term growth will hinge on narrowing infrastructure gaps, strengthening the rule of law, and enhancing trade integration.
The fund stressed the need to prioritise investment in energy, transportation, telecommunications, and water, underscoring the importance of private sector involvement, Mexico Business News reports.
It also noted that fostering a better investment climate will require clearer regulations and more efficient procedures, especially in light of recent legal reforms and the dissolution of independent regulatory bodies.
On fiscal matters, the IMF projected Mexico’s budget deficit at 4.3% of GDP for this year, higher than the planned 3.9%, and estimated that gross public debt could rise to 61.5% of GDP by 2030.
The fund urged a more ambitious short-term consolidation strategy to bolster fiscal credibility and provide room for countercyclical spending in response to external shocks.
The IMF also recommended maintaining social programs and growth-focused public investment while raising additional revenue through better administration and tax reforms.
Suggested measures include making personal income taxes more progressive, removing tax exemptions, and broadening carbon and mining royalties.
Furthermore, the fund also underscored the importance of enhancing the financial sustainability of state-owned enterprises Pemex and CFE, welcoming recent initiatives aimed at improving their performance.
In addition, the IMF expressed concern over the independence of Mexico’s judiciary and regulatory bodies, noting that the recent elimination of independent agencies warrants careful attention.