1Q26_ Quarterly Outlook Report_Final_EN - Flipbook - Page 91
T H E P LUMB LI N E | A RETU RN TO F I RS T PRI N CI PL ES
MEXICO
Juan Manuel Herrera
Betancourt
Senior Economist,
Investment Strategy
Eduardo Suarez Mogollon
Vice President, LATAM
Economics
Latest
2025f
2026f
2027f
GDP Growth
-0.1%
0.1%
0.6%
1.0%
Inflation
3.8%
3.8%
3.8%
3.7%
Unemployment
2.9%
2.9%
3.3%
3.8%
Budget Bal.
-5.0%
-4.3%
-4.1%
-3.6%
Latest
2025
1-yr fwd
2-yr fwd
3-mo yield
7.3%
7.3%
7.8%
8.5%
10-yr yield
9.1%
9.1%
9.6%
9.9%
Yield curve slope
1.9%
1.9%
1.8%
1.4%
Source: Bloomberg Finance LP, Scotiabank Economics, Scotia Wealth Management. "Latest" values are as at December 31, 2025 and, for data other than bond
yields, pertain to the most recent monthly, quarterly, or annual reading available on this date. GDP, inflation, and unemployment forecasts are based on Scotiabank
Economics forecasts dated December 11, 2025. Budget balance forecast is based on median consensus estimate compiled by Bloomberg | 2025 inflation and
unemployment are based on the average YoY rates for each month of the year. | 2025 yields are as at December 31, 2025. Forward periods are relative to December
31, 2025 and are based on forward market pricing.
Key conclusions
•
Mexican GDP growth should pick up in 2026, as the economy leaves behind large
imbalances in growth due to the end of the previous administration’s massive public
works and as manufacturing output steadies at weak levels aligned with the new tariff
reality. Although faster, growth should remain underwhelming in 2026 at no higher than
a 1% pace.
•
Banxico’s easing cycle, with past and incoming rate cuts filtering through the economy,
will be an offset to a challenging external environment that will limit export growth and
dampen business hiring and investment sentiment already weakened by the
government’s reformist agenda.
•
Uncertainty is in high supply. At home, Banxico’s rate path will likely clash with new sales
taxes, adding to an already-precarious inflation trajectory, and Mexico’s government will
likely continue to struggle to rein in public finances and possibly consider tax hikes.
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