By Mexico’s economy seems to be on a path to recovery, albeit a gradual one, dipping slightly to 1.2% in 2025, and then picking up again to 1.6% by 2026.
This prediction comes from the “Economic Outlook for Mexico” report by the Organization for Economic Co-operation and Development (OECD).
The factors fueling this moderate growth mainly include a drop in inflation and a more adaptable monetary policy.
The OECD believes that this steady uptick in growth will keep consumer activities buoyant and instil confidence among investors soon.
The report states, “The anticipated moderate economic growth reflects diminishing inflationary pressures, which are set to bolster consumption, alongside a slow decline in interest rates poised to spark investment, even with fiscal tightening expected in 2025.”
What’s driving the economic upswing?
Alongside the favourable inflation forecasts, Mexico’s exports are expected to hold strong, thanks to positive economic trend from the United States, its main trading partner.
The OECD projects inflation to ease to about 3.3% by 2025 and further lower to 3% in 2026.
“To keep inflation on its downward path, the central bank should continue with a cautious and gradual easing cycle. Rolling out a medium-term fiscal strategy could help shrink the deficit gradually, paving the way for productivity-boosting investments, particularly in infrastructure and education,” suggests the OECD report.
Holistic policy suggestions
The report emphasizes the need for a broad-based economic policy approach, especially in boosting gender participation in the workforce.
For instance, setting up a comprehensive early childhood education and care system might significantly lift female workforce involvement.
Additionally, widening dual vocational training programs could enhance technical skills supply and formal job access.
Such policy steps could also fortify Mexico’s human capital, a cornerstone for sustained economic growth.
By channelling investments into education, Mexico could enhance its workforce’s skill set, making it more competitive on a global scale and better prepared to tackle economic hurdles.
What can investors and consumers expect?
According the report, with inflation and interest rates expected to ease gradually, both consumers and investors might find the environment more favourable.
For consumers, lower interest rates generally translate to cheaper borrowing, which can spur spending on goods and services.
For businesses, a softer inflation scene combined with lower interest rates might encourage investments in capital projects, tech, and workforce development.
The OECD cautions that hitting these economic targets will require careful fiscal management, along with initiatives to enhance human capital.
“Investors need to be mindful that while conditions are on the mend, factors like global economic stability, trade pacts, and the execution of domestic policies will significantly influence Mexico’s economic landscape,” the report highlights.
Mexico’s economic outlook in 2025
Overall, even though Mexico’s economic growth for 2025 is expected to be a modest 1.2%, the driving forces behind this trend, such as reducing inflation and more flexible monetary strategies, offer a cautiously optimistic perspective.
If managed well, ongoing improvements in the economic climate could lead to more robust growth in the following years, ultimately benefiting both consumers and investors.
As Mexico steers through its recovery, strategic investments in education, infrastructure, and workforce training will be key to building long-term economic resilience and global competitiveness.
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