Slow Economic Recovery Expected in 2026
Mexico, Latin America’s second-largest economy, is projected to see a gradual rebound in 2026 following a period of near stagnation in 2025. According to a Reuters poll of 33 economists conducted between October 13–17, Mexico’s GDP is forecast to grow 1.3% next year, up from just 0.5% in 2025.
This improvement is largely driven by hopes for a successful USMCA trade renegotiation, increased private-sector confidence, and a short-term boost from hosting the 2026 FIFA World Cup alongside the U.S. and Canada.
“Mexico will be one of the host nations for the World Cup, an event that, in itself, always serves as a catalyst for economic activity,” said Marcos Arias, senior economist at GBM.
Trade Pressures and Tariffs Continue to Weigh
Despite positive drivers, trade tensions and U.S. tariffs remain a significant concern, particularly for sectors like automotive manufacturing, which have already felt the impact of tariffs on exports.
“It is unlikely U.S. tariffs (on some Mexican sectors) will be reversed, and the sectoral decline is expected to persist in the coming months, affecting employment,” said Jesus Lopez, deputy head of research at Banco Base.
Moreover, negotiations over proposed tariff increases on Chinese and other Asian imports continue in Congress, adding uncertainty for businesses and investors.
Inflation Outlook Remains Elevated
Inflation in Mexico is expected to stay close to the upper limit of the central bank’s target range of 3% ±1%, with median estimates at 3.8% for 2025 and 3.7% for 2026.
“This, combined with tariffs on Chinese imports, could begin to inject upside pressures in some prices,” said Jose Sanchez, Mexico chief economist at HSBC.
Most economists surveyed indicated that inflation risks are tilted upward, primarily due to a narrowing output gap and ongoing tariff pressures.
Infrastructure Projects and Policy Support Provide Tailwinds
Alongside trade negotiations and event-driven boosts like the World Cup, infrastructure projects are gaining momentum across Mexico, providing additional support for economic activity. The central bank is expected to maintain gradual monetary easing, offering further stimulus to key industries.
“Besides extra monetary stimulus from rate cuts and greater private sector confidence on trade agreements, infrastructure projects are already gaining pace,” noted Marcos Arias.
Outlook: Cautious Optimism
While Mexico’s economic growth is set to improve in 2026, uncertainties remain. Inflation pressures, ongoing tariffs, and trade-related risks could limit upside potential, particularly for export-dependent industries.
Economists remain cautiously optimistic that domestic stimulus and event-driven economic activity can offset some of the challenges, but the pace of recovery is expected to remain modest.
Takeaway: Mexico’s economy is on a slow recovery path in 2026, supported by domestic stimulus, infrastructure investment, and the World Cup. However, elevated inflation risks and trade uncertainties highlight the need for cautious monitoring of key sectors like automotive and exports.
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