Mexico’s economy is set for near-stagnation this year, according to a Reuters poll, as fresh tariffs from the United States dampen business sentiment and curb investment.
After narrowly avoiding a technical recession last quarter, Latin America’s second-largest economy now faces growing headwinds, largely fueled by the aggressive trade policies of US President Donald Trump.
In a survey conducted between April 21 and 25, the median estimate of 32 economists projected Mexico’s gross domestic product (GDP) would expand by just 0.2% in 2025. This marks a steep downgrade from January’s forecast of 1.2%.
The gloomy forecast also stands in stark contrast to the government’s projection of 1.5% to 2.3% growth and even falls below the International Monetary Fund’s prediction of a 0.3% contraction.
Economists cited sluggish private consumption, a decline in investment, and weakening industrial output as major drags on economic activity.
Tariffs hammer business sentiment, trigger production shifts
The Reuters poll highlighted the severe impact US tariffs have had on Mexican business confidence.
About 50% of respondents described the effect as “negative,” while another 42% labeled it “very negative.”
Not a single analyst viewed the tariffs positively — a sharper pessimistic consensus than in Brazil, where only 5% of analysts reported very negative views in a similar poll earlier this month.
New 25% tariffs — which US officials say respond to concerns over immigration and fentanyl trafficking — have especially weighed on Mexico’s key sectors. Automotive, metals, and vehicle exports are among the hardest hit.
According to Banamex, effective tariff rates on Mexican exports surged to 12.7% in 2023 from just 0.2% in 2024, although commodities protected under the USMCA trade deal were excluded from these figures.
In response, several companies are restructuring supply chains to boost regional content and retain USMCA eligibility, despite escalating production costs.
Others are moving parts of their operations to the United States, threatening jobs and industrial competitiveness back home.
“It is up to Mexican companies to make the necessary adjustments to remain viable in the US market,” Banamex said.
“Authorities must support this transition and tread carefully during upcoming USMCA renegotiations.”
Sheinbaum’s government scrambles to limit the fallout
Facing mounting pressure, Mexican President Claudia Sheinbaum’s administration is working to contain the damage.
Efforts include negotiations with US officials and allocating limited funding for domestic stimulus projects.
However, persistent uncertainty over US policy clouds Mexico’s outlook.
All 12 economists who answered supplemental questions cited downside risks to their GDP forecasts, underscoring the fragility of Mexico’s recovery.
Although preliminary GDP estimates showed the economy narrowly avoided a recession last quarter with flat growth, analysts warned the figure could be revised downward.
With rising tariffs, weakening investment, and slowing consumption, Mexico’s economic prospects for 2025 remain deeply challenging — unless global trade conditions improve significantly.
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