After INEGI reported yesterday morning that Mexico’s GDP contracted by 0.29% in the third quarter of this year compared to the previous quarter, Grupo Financiero Base released an economic analysis that suggests a technical recession is likely to occur in the last quarter of 2025.
The financial firm indicated in its “Economic Outlook for Mexico” analysis that, in a central scenario, GDP would fall by 0.30% quarter-on-quarter in the October-December period, and in a pessimistic scenario, it would fall by as much as 0.60%, thus triggering this situation.
In an optimistic scenario, there would be growth of 0.30% in the last quarter of this year, avoiding a technical recession, which is defined as two consecutive quarters of economic decline.
However, Gabriela Siller, Director of Economic Analysis at Banco Base, stated during the presentation of the analysis that the country’s economy is likely heading toward stagnation that could last for several years. “It is estimated that Mexico’s GDP could grow by 0.54% this year and will show higher growth in 2026, but only by 1.07% (in central scenarios).
“These growth rates are very low and do not compensate for population growth, so GDP per capita would end up below 2018 levels,” he stated.
“And if, on the one hand, we continue to see remittances decline, and the government continues to cut public spending, both on infrastructure and transfers, the possibility of a recession would be open,” he warned.
Regarding the exchange rate, Base estimated that it will close 2025 between 18.50 and 18.70 pesos per dollar and that by 2026 it could be below 18 pesos in February, but would rise to 19 by mid-year, when the USMCA review is discussed.
Siller noted that the World Cup could to have a positive effect on consumption.
Regarding inflation, he estimated that it will close 2025 at 3.87%.
“If the year-end forecast materializes, the average monthly inflation for the year will be 3.81%.”
“For 2026, inflation is estimated to average 4.01% per month, with March being the month with the highest expected inflation at 4.28%, and May and June the months with the lowest expected inflation at 3.65%,” he noted.
On the subject of the country’s public finances, he mentioned that a fiscal deficit of 3.9% of GDP was initially approved for this year and was adjusted to 4.3%.
“Fiscal consolidation of public finances will not be achieved before 2027,” he warned.
“I’m concerned that they’ve revised the deficit forecast upward several times and could continue this trend next year, reaching 4.5%.”
Regarding foreign trade, Siller noted that US computer equipment imports from Mexico fell to second place in July, with a 31.26% share, now surpassed by Taiwan.
Source: reforma
