The International Monetary Fund (IMF) updated its 'World Economic Outlook' (WEO) document yesterday, published in Washington, where it forecasts that the Mexican economy will grow by 1.6% in 2026, representing a marginal upward revision of 0.1 percentage points from previous estimates. For 2027, the IMF projects a GDP growth for Mexico of 2.2%, higher than the 2.1% anticipated in a January report before the war. 'It is expected that the lower growth in 2025 – of 0.6% with original figures – due to fiscal consolidation, restrictive monetary policy, and obstacles derived from trade tensions, will give way to a slight recovery, with an economic expansion of 1.6% in 2026,' the report states regarding Mexico. The implicit message from the Fund is that the impact of the war on the Mexican economy would be very limited. Regarding inflation, the IMF's expectation is that the Bank of Mexico's (Banxico) target will be reached by the end of this year and will stand at an average of 3.9% annually, which implies an upward revision from the previously forecast 3.3%. For 2027, inflation in the Mexican economy is expected to decelerate to an average of 3.4% annually. The organization warns that uncertainty, while lower than the peaks reached in 2025, remains historically high. Several inflection points in the coming months could trigger rebounds. Above all, the situation in the Middle East remains fluid. This is the reason why the IMF forecasts a deceleration of global growth to 3.1% in 2026, from 3.4% in 2024-25, as well as an increase in inflation to 4.4%, compared to 4.1% last year, due to rising commodity prices. Under the assumption of a limited and temporary conflict, a global growth of 3.2% is projected for 2027, and inflation is expected to decrease to 3.7%. In an adverse scenario, with more pronounced and persistent increases in energy prices, global growth would slow down even further, to 2.5% in 2026, and inflation would reach 5.4%. In a more severe scenario, with greater damage to energy infrastructure in the conflict region, the impact would be even greater, as global growth would be reduced to only 2% in 2026, a level only reached four times since 1980, while general inflation would slightly exceed 6% in 2027, according to the Fund. Thus, faced with the great uncertainty overshadowing the outlook, the IMF considered three scenarios: the baseline, the severe, and the grave. The latter two are to guide economic policymakers in preparing for the consequences of a prolonged conflict. Separately, the World Bank (WB) maintained its growth outlook for Mexico this year at 1.3%, but reduced the projected growth for 2027 from 1.8% to 1.7%, remaining below the expectation for Latin America and the Caribbean in both cases. According to the latest edition of its regional 'Economic Panorama', published last week, the low growth Mexico has experienced since 2024 is likely to continue in 2026, as the diminishing impact of large public infrastructure projects coincides with current uncertainty over trade policy. While the cycle of Banxico's monetary easing should provide some support to domestic demand, it is likely to only partially offset adverse external factors, particularly revisions related to USMCA, which affect corporate planning horizons, the WB warns. In sum, the overall impact on demand is weak, as previous support from public investment fades and uncertainty regarding trade policy persists. Monetary easing provides some relief, but external adversities linked to tariff dynamics make short-term prospects cautious. In any scenario, whether from the IMF or the WB, Mexico's growth is very modest. There will be a rebound, but the environment is risky, such as the fiscal consolidation process, the revision of USMCA, and the U.S. tariff policy.
