Banxico ups Mexico’s annual GDP growth forecast to 1.5%

Banxico, Mexico's central bank, has revised its annual GDP growth forecast for the country to 1.5% for 2026, an increase of 0.4 percentage points from the previous estimate. The more optimistic projection is included in the bank's second-quarter report, published last Wednesday. The bank attributes the upward revision to "stronger-than-expected economic growth during the second quarter," when Mexico's economy expanded by 1.4% compared to the first quarter and 1.9% annually.

However, the stronger growth is partially offset by a slowdown during the third quarter. The bank expects economic growth to accelerate to 2% in 2027. The revised forecast comes amid uncertainty surrounding the USMCA trade agreement, as the United States has declined to renew the free trade pact in its current form. Additionally, geopolitical tensions, such as the resurgence of tensions between the United States and Iran in July, have raised concerns about the global economy and Mexico's economic activity.

Despite these risks, inflation in Mexico remains under control, with the annual headline rate in the first half of August at 3.26%, slightly higher than the previous month. The Mexican peso is also strong, trading above 17 to the dollar.