The second quarter of 2026 confirms a fragile economic environment for Mexico, as inflation moderates but remains above the target; employment and consumption offer some support, while investment continues to lag and GDP growth is minimal.
This is according to CIAL dun & bradstreet, which noted that annual inflation moderated to 4.45% in April, after reaching 4.59% in March, marking three consecutive months of decline in the core inflation rate (4.26% annually).
Last Friday, the Mexican Institute of Finance Executives (IMEF) indicated that its estimate for real GDP growth in Mexico in 2026 has been reduced to 1.2%, and the inflation rate estimate for 2026 has been increased to 4.3%.
S&P Global Ratings also estimated that the Mexican economy will grow by only 1% in 2026, affected by uncertainty surrounding the renegotiation of the USMCA, rising energy prices, and lower private investment, while Banamex estimated that Moody’s could downgrade Mexico’s credit rating by the end of June.
For its part, CIAL dun & bradstreet highlighted that analysts expect inflation to close the year at 4.1%, still above Banxico’s target.
On the other hand, it noted that formal employment showed progress, with 22.75 million workers registered with the IMSS in April, representing a 1.5% year-on-year increase and 331,000 new jobs in the last 12 months.
Likewise, the average daily wage was 665 pesos, representing a 2.3% year-on-year real increase, its slowest pace since 2022.
In the automotive market, 118,859 light vehicles were sold, a record high for April, with an 8.6% year-on-year increase.
However, it was noted that investment continues to lag. In February, it fell 3.6% year-on-year, marking 18 consecutive months of decline. Investment in machinery and equipment fell 9.1%, while construction advanced 1.5%.
On another note, economic expectations were revised downward. According to the Bank of Mexico’s survey, GDP is now projected to grow by 1.35% in 2026, following stagnation at 0.2% year-on-year growth in the first quarter, and by 1.8% in 2027.
Inflation expectations for this year rose to 4.37%, while the Bank of Mexico’s benchmark interest rate is expected to remain at 6.50% until 2027. The exchange rate is projected to close at 18.02 pesos per dollar.
The government announced an administrative simplification package to accelerate investment, with authorizations taking 30–90 days. However, only 2% of analysts believe it is a good time to invest, citing sociopolitical factors such as corruption, insecurity, and a lack of rule of law.
Finally, the Bank of Mexico cut its benchmark interest rate to 6.50%, following 15 reductions in 27 months from the previous level of 11.25%. The decision was split within the Governing Board, amid controlled inflation and stagnant GDP. In contrast, the Fed maintained its rate at 3.75%, given inflationary pressures in the US.
Source: vangurdia
