Mexico has revised its economic growth forecast for 2025, citing uncertainty and aggressive trade policies from its main trading partner, the United States. The country’s finance ministry has reduced its growth outlook to 0.5-1.5 percent, down from the 1.5-2.3 percent forecast in April. This revision is more in line with market expectations and forecasts by the Bank of Mexico, which predicted growth of 0.4-0.6 percent.

The Mexican economy, the second largest in Latin America, expanded 1.2 percent in 2024. The US has imposed tariffs on Mexican products, including automobiles and steel, threatening bilateral trade that exceeded $800 billion last year. Mexico’s finance ministry attributes the reduced growth forecast to these trade policies, which have created uncertainty and affected the country’s economy.

Despite the current challenges, the Mexican government predicts the economy will grow between 1.8 and 2.8 percent in 2026, above market and central bank expectations. The finance ministry believes the economy will continue to show resilience due to strong household consumption, domestic investment, and the country’s strategic position in global value chains.

The central bank forecast growth of 1.1 percent. In addition to the revised growth forecast, the finance ministry announced that 3 percent of GDP would be allocated in 2026 to social programs that will directly benefit almost 82 percent of families in Mexico. A cash transfer program for vulnerable sectors is a cornerstone of President Claudia Sheinbaum’s economic plan.

The reduced growth forecast highlights the impact of trade policies on Mexico’s economy. The country’s strategic position in global value chains and strong household consumption are expected to contribute to its economic resilience. As Mexico navigates the challenges posed by US trade policies, the government’s allocation of funds to social programs aims to support vulnerable sectors and promote economic growth. The revised growth forecast and allocation of funds to social programs demonstrate the Mexican government’s efforts to address the current economic challenges and promote sustainable growth.