Mexico's 2026 GDP Forecast Gets a Major Upgrade
ThomasAnalysts have raised Mexico's 2026 growth and peso forecasts, buoyed by recent performance, yet inflation and security risks persist.
Private-sector analysts have raised their expectations for Mexico's economic growth in 2026, according to the central bank's January survey. The updated outlook follows stronger-than-anticipated economic performance at the end of 2025.
Stronger Growth Spurs Upgraded Forecasts
The median forecast for Mexico's 2026 GDP growth now stands at 1.3%, an increase from the 1.15% projected in the mid-December survey. In contrast, the outlook for 2027 saw a slight downward revision to 1.8% from 1.85%.
This optimism is rooted in new data showing Mexico's economy expanded by 1.6% year-over-year in the fourth quarter of 2025. The expansion was led by solid performance in the agriculture sector, with more modest growth recorded in the industrial and services sectors.
USMCA Renewal and Key Economic Risks
According to market sources, growth prospects for both 2026 and 2027 hinge on the successful and timely renewal of the US-Mexico-Canada (USMCA) free trade agreement. Negotiations are scheduled to conclude in July.
Optimism surrounding the talks is reflected in the survey’s quarterly breakdown, which projects GDP growth will accelerate to 1.54% in the third quarter of 2026, up from 1.1% in the second quarter.
Despite the positive outlook, analysts identified public security as the primary short-term risk to economic growth. This concern significantly outpaced foreign trade issues, with both factors cited far more frequently than any other potential headwind in the survey.
The Outlook on Inflation and Interest Rates
Analysts slightly increased their inflation expectations for 2026, with the forecast moving to 3.95% from 3.88%. The estimate for core inflation, which excludes volatile food and energy prices, remained unchanged from the previous survey at 3.75%.
Annual inflation slowed to 3.69% in December—the lowest December reading since 2020. However, core inflation, despite easing to 4.33% from 4.43%, remained above the central bank's 4% upper target for the eighth consecutive month.
The central bank cut its target rate to 7% on December 18, down from 10% at the start of 2025. Analysts expect the tightening cycle to end this year and forecast the rate will close 2026 at 6.5%. The bank's next monetary policy decision is scheduled for February 5.
Analysts Project a Stronger Mexican Peso
The survey also revealed a stronger forecast for the Mexican peso. Analysts now project an exchange rate of Ps18.50 per US dollar by the end of 2026, a significant improvement from the previous forecast of Ps19.23. The end-2027 forecast was also strengthened, moving to Ps19.00 from Ps19.45.
This view aligns with recent market performance. The US dollar weakened by roughly 4% against the peso over the last month, trading at Ps17.26 on February 3 compared to Ps17.9 on January 3.
