Economic weakness will help offset inflation in the second half of the year: FocusEconomics

Market consensus anticipates that the Mexican economy will register a 0.1% GDP growth this year, according to information collected by the consulting firm FocusEconomics.

This average growth forecast contrasts with the 1.1% they expected at the beginning of the year.

Among the 45 analysts surveyed by the firm, seven expect an economic contraction; six predict zero growth, and 33 believe that activity will barely manage to break away from zero, achieving, in the best-case scenario, growth between 0.2 and 1.5 percent.

According to the panelists, deportations, protectionism, and the US economic slowdown will slow exports and the flow of remittances, which is also incorporated into their economic forecasts.

This weakening of growth drivers will also help alleviate inflationary pressures, and they anticipate that the National Consumer Price Index (NCPI) will register an average variation of 3.9%, slightly higher than the 3.8% projected in June.

In the monthly Latin Focus ConsensusForecast report, they specified that this expected average fluctuation incorporates the combined effects of a weakening currency, upward pressure on the minimum wage, and new taxes on retail platforms.

If expectations are met, this would mean events that will mitigate the upward pressure on inflation brought about in the first half of the year. It's worth remembering that just last week, the National Institute of Statistics and Geography (INEGI) reported that inflation registered an annual change of 4.23 percent in June.

Fiscal balance in line with goal

In its monthly report on expectations, the consultancy firm notes that panelists anticipate the federal government will reduce the fiscal deficit inherited from the previous administration in accordance with the goal set in the budget.

Thus, in Claudia Sheinbaum's first year in office, the deficit would be reduced by just over a tenth of a point, leaving it at 3.8% of GDP.

This deficit, which they expect will be reached by the end of the year, will be below the historic 4.9% of GDP left by former President Andrés Manuel López Obrador at the end of his administration.

Despite the consolidation efforts, the panelists consulted anticipate that next year, this deficit will barely decline to 3.5% of GDP.

Expectations for 2026

According to expectations gathered by FocusEconomics, the experts consulted anticipate that the economy will experience a recovery next year, allowing it to achieve growth of 1.3 percent.

If correct, this will be the third consecutive year in which the economy has grown below its average potential performance of 2.5 percent.

They estimate that even with this weakness in economic activity, inflation will register a variation of 3.7% at the end of the year. This forecast will remain above the Bank of Mexico's specific target of 3%, but within the permissible range of variability, which is 4%.

The one that grows the least

When reviewing growth expectations for Brazil and Central America, Mexico is the country with the lowest growth this year.

However, the regional outlook includes a forecast of contraction in Haiti (-1.5%) and Cuba (0.6%),

Mexico's GDP stagnation also contrasts with the 2.2% expected for Brazil and will be well below the 2.1% average anticipated for Latin America and the Caribbean.