Why did the Bank of Mexico cut its growth forecast?

The Bank of Mexico lowered its growth forecast due to weaker-than-expected third-quarter GDP performance, impacted by global trade uncertainty and declining industrial production.

What is Mexico's current inflation situation?

Annual headline inflation was 3.61% in early November, and core inflation was 4.32%, with the central bank aiming for a 3% target by mid-2026.

What are the concerns about Banxico's inflation forecasts?

Some officials question the credibility of Banxico's long-term inflation forecasts, especially given elevated short-term inflation and analyst predictions.

Home / Business and Economy / Mexico's Economy Grinds to Halt: Growth Near Zero

Mexico's Economy Grinds to Halt: Growth Near Zero

27 Nov

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Summary

Mexico's economic growth forecast slashed to near zero percent.
Third-quarter GDP contracted by 0.3% due to industrial weakness.
Central bank maintains inflation target despite doubts.

Mexico's Economy Grinds to Halt: Growth Near Zero

Latin America's second-largest economy is facing significant headwinds, prompting the Bank of Mexico to drastically lower its 2025 growth forecast to a mere 0.3%. This downgrade reflects a worse-than-expected performance in the third quarter, where GDP contracted by 0.3%, primarily due to slumping industrial output and reduced auto exports amidst ongoing trade tensions.

The central bank's decision comes amid internal debate regarding its monetary policy. Despite a series of benchmark rate cuts, totaling four percentage points since early last year, concerns have been raised about the reliability of Banxico's inflation forecasts. Officials are closely watching annual headline inflation, which stood at 3.61% in early November.

While the bank aims to achieve its 3% inflation target by the latter half of next year, projections from analysts suggest a potentially higher inflation rate. This divergence in outlook highlights the delicate balancing act Banxico faces in stimulating growth while managing price stability in an uncertain economic climate.