Economics: The figures published in March show a slowdown in economic activity and upward pressure on inflation
Mexico’s March figures reveal a slowdown in economic activity after the optimism sparked by the uptick in growth at the end of 2025. In the fourth quarter of 2025, demand strengthened thanks to a rebound in private consumption and robust export performance, although investment continued to contract. By January 2026, however, the IGAE showed only modest 0.5% annual growth, with industry weakening and services sustaining momentum.
Inflation rose in February, driven mainly by the volatile non-core component—particularly fruits, vegetables, and government-administered tariffs—while core inflation remained stubbornly above 4% for ten months, limiting Banxico’s control. Inflationary pressures persisted into March, but Banxico decided to cut the interest rate by 25 basis points to 6.75% in a divided decision, narrowing the differential with the United States to its lowest level in over a decade.
Employment growth remained weak, concentrated almost entirely in the informal sector, while real wages continued rising but faced mounting cost pressures on businesses. It is estimated that this growth will not be sustainable in the coming months.
The trade balance posted a larger deficit in January, with exports supported by non-automotive manufacturing and imports reflecting modest consumption recovery. On the public finances front, public revenues exceeded targets, yet expenditures grew sharply, and the public debt increased well above GDP growth. Pemex reported a reduced but still significant net loss in 2025, with persistently low crude oil production and exports.
Overall, these indicators point to modest GDP growth prospects of around 1.2% for 2026, amid ongoing challenges in inflation control, investment, and macroeconomic stability. We have accordingly revised our projections for the current and next year.
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