1Q26_ Quarterly Outlook Report_Final_EN - Flipbook - Page 92
T H E P LUMB LI N E | A RETU RN TO F I RS T PRI N CI PL ES
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From abroad, the USMCA review may see some small increases to regional content
requirements with posturing ahead of, and during, the negotiations keeping businesses
and markets on edge.
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. 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. Although
faster, growth should remain underwhelming in 2026 at no higher than a 1% pace on the back
of normalizing private and public spending and investment.
We expect weaker growth for Mexico versus other economists
GDP, annual change
2.0%
1.9%
1.5%
1.2%
1.0%
1.0%
0.6%
0.5%
0.4%
0.1%
0.0%
2025e
2026f
Banxico survey median
2027f
Scotiabank Economics
Source: Banxico, Scotiabank Economics, Scotia Wealth Management.
Our stance on Mexico’s near-term economic future is significantly more pessimistic than that of
most economists (Fig X). While we project 0.6% and 1% GDP gains in 2026 and 2027,
respectively, the median economist polled by Banxico estimates GDP gains of 1.4% and 1.8% in
2026 and 2027, respectively – which averages out to twice our projections across the two years.
Our below-consensus call is predicated on somewhat weaker 2026 forecasts for the U.S. (1.6%
versus 1.8% Bloomberg median), a more negative view on the impact of U.S. trade policy on
Mexican investment/hiring and exports, and expectations that business sentiment will remain
depressed due to a multitude of factors (e.g., public and fiscal policy, crime, and rule of law).
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