October 30, 2025
The Executive Board of the International Monetary Fund (IMF) has completed the 2025 Article IV Consultation for Mexico. The authorities have agreed to publish the accompanying Staff Report.
Mexico’s economy expanded by 1.5 percent in 2024 and is projected to grow by 1.0 percent in 2025, reflecting the effects of fiscal consolidation, tight monetary policy, and continued trade uncertainty. Growth is expected to strengthen modestly to 1.5 percent in 2026 as domestic policies ease. Softer demand, normalizing food prices, and the recent appreciation of the peso are expected to help bring inflation back to Banxico’s 3 percent target by the second half of 2026.
The 2024 fiscal expansion is expected to be reversed this year, with gross public sector debt projected to reach 58.9 percent of GDP by end-2025. The government’s medium-term fiscal targets envisage further deficit reduction, although the debt ratio is expected to rise gradually over time. Banxico has reduced interest rates by 375 basis points since early 2024, in line with falling inflation, but monetary policy remains moderately contractionary.
The financial system remains strong and well supervised, with solid capital and liquidity buffers. Mexico maintains adequate external reserves and an external position broadly consistent with fundamentals. A temporary improvement in the current account, reflecting weak domestic demand, is expected to narrow over time as the trade balance softens and remittances moderate.
During the consultation, IMF Executive Directors commended Mexico’s sound macroeconomic management and policy frameworks, which have supported resilience amid global uncertainty. They emphasized the importance of maintaining prudent policies while advancing structural reforms to raise potential growth.
Directors welcomed fiscal consolidation efforts and encouraged a more ambitious medium-term strategy to stabilize debt and create space for future shocks. They underscored that fiscal adjustment should prioritize protecting social spending and productive investment, supported by stronger tax administration and policy reform. Improving the financial position of state-owned enterprises, particularly Pemex, remains a key priority.
Directors also praised Banxico’s success in lowering inflation and agreed that further monetary easing should be data-driven. They highlighted the importance of a flexible exchange rate to help absorb external shocks and maintain stability.
Looking ahead, Directors emphasized that sustained growth will require addressing structural challenges such as infrastructure gaps, the business environment, judicial independence, and corruption. They also reaffirmed the importance of open trade and recommended that industrial policies remain targeted, transparent, and consistent with Mexico’s trade commitments.
Source: (International Monetary Fund)
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