According to figures from the National Institute of Statistics and Geography (Inegi) , Mexico’s Gross Domestic Product (GDP) grew only 0.2% in the first quarter of 2025, with which the country avoided a technical recession, due to the primary sector, which involves agricultural activities, since both services and industrial production fell 0.1% in the period, considered Rodolfo Ostolaza , deputy director of Economic Studies at Banamex .

At the Banamex Dialogues event , he emphasized that production fell 0.1% during that period, and recalled that it had also shown a 1.5% decline in the fourth quarter of 2024. In this regard, he indicated that the tariffs imposed by the United States had a significant impact, “especially on the advancement of purchases by North American users.”

Regarding construction , he noted that civil engineering projects, including trains, airports, and others, have grown significantly in recent years, although this expansion has already concluded. He estimated that it will decline further due to a decline in public investment of approximately 14% in real terms.

Regarding services , he said that after 13 consecutive quarters of increases, this sector showed a decline in the first quarter of 2025.

Given this scenario, the specialist specified that in the last three quarters, from the third of 2024 to the first of 2025, “it has been external demand, that is, exports less imports, that has generated growth.”

In his remarks, he considered that Mexico does have a relatively better tariff position compared to other countries, as it is highly integrated with the United States, “but the key here is to understand that we will have a greater share of U.S. investment, but a smaller share.”

Ostolaza asserted that Mexico remains the United States’ main supplier of goods, although Vietnam and Taiwan are beginning to appear more prominently in this regard. He indicated that the financial institution forecasts zero growth for the country this year. “It’s possible that the economy’s stagnation will continue,” he emphasized.

Economy in the federal entities

Campeche, Tabasco, and Quintana Roo showed a drop of around 7% in GDP in 2024, according to Guillermina Rodríguez , director of Economic Studies at Banamex.

The specialist indicated that in Tabasco and Campeche, the GDP decline was due to the completion of flagship projects of the previous administration, such as the Dos Bocas refinery and the Mayan Train, while in Quintana Roo, it was due to a weak performance of the tourism sector.

“In the rest of the country, we’re seeing some signs of growth, perhaps most significantly in Nuevo León, but we also have Durango and Oaxaca, the latter two primarily driven by investments in construction,” he emphasized.

Meanwhile, Nuevo León and Chihuahua posted positive numbers in the first quarter of the year, taking advantage of the tariff situation to export, especially manufactured goods.

Inflation, with ups and downs for the remainder of the year

Paulina Anciola , deputy director of Economic Studies at Banamex, said that although inflation has been rising this year, reaching 4.5% in the first half of June, this figure is not as negative as it seems, since it is “in fact, the historical average of inflation.”

“So it’s not surprising that we’re at those figures now. In any case, we do think it will resume a downward trend, especially in June and July, which would drop inflation below 3% in July and then rebound to return to 4% by the end of the year,” he noted.

He noted that this increase is part of what’s happening within the core component (which excludes goods and services with more volatile prices or those that don’t respond to market conditions), as merchandise inflation is rising slightly faster than services inflation is falling.

“In any case, this increase in merchandise inflation was relatively expected because it had been very low in recent years and is also returning to its historical average,” he emphasized.

In this regard, he estimated that headline inflation could close the year at 4%, while core inflation would remain at 3.9%. He added that the Bank of Mexico (Banxico) is expected to make 25 basis point cuts between now and the end of 2025, which would bring the rate to 7.25%.

Regarding the exchange rate, he predicted it would close the year at around 20.6 pesos per dollar, pressured by factors such as the revision of the United States-Mexico-Canada Agreement (USMCA) , which could take place in the second half of the year.

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El cargo Mexican economic stagnation could extend, warns Banamex apareció primero en T21.

The specialist specified that tariffs are a bad measure for the global economy, the U.S. economy, and Mexico. “We estimate that Mexico has imposed some tariffs , but particularly on anything that doesn’t respect the United States-Mexico-Canada Agreement (USMCA) .”

He explained that the Mexican economy has been stagnant for two years due to very high interest rates and the previous administration’s “overreach” in fiscal matters and excessive spending.

“It’s internal uncertainty, it’s the elections, and a rather worrying deterioration of the checks and balances in Mexico, with judicial reform and elections for judges, which is a structural factor. The truth is, this prevents us from being more optimistic about the Mexican economy in the long term, because legal certainty and the certainty of the rules of the game are very important, and you can’t see it overnight. That’s going to continue to be negative,” he stated during the Banamex Dialogues event .

What does the global outlook look like?

Regarding the global outlook, Sergio Kurczyn noted that on the financial front, “things are going quite well, with a lot of nervousness in the financial markets, but beyond the risks, if you look at the stock markets, the American one in particular has done well so far this year, but also others like the European one.”

Interest rates have been declining in recent quarters , across the globe in general, the specialist estimated, adding that in terms of productive activity, the global Gross Domestic Product (GDP) tends to grow by around 3% and was close to this goal in 2024, although he anticipated a slowdown to 2.3% this year.

“In the central scenario, that is, in productive activity, we have been seeing a slowdown in the global economy for several months now, and in particular a slowdown in production in the American economy, which is very important for Mexico and also helps explain the outlook for slowdown or stagnation we see for the country’s economy,” he emphasized.

He asserted that these figures “are good numbers” and emphasized that “there are financial conditions for growth today.”

Despite this, he considered that there is nervousness due to current and structural factors such as Donald Trump ‘s presidency and the changes and executive orders he has signed, which have contributed to the inflation caused by tariffs.

U.S. interest rates affect Mexican interest rates, especially medium- and long-term interest rates, although short-term interest rates in the country depend on what the Bank of Mexico (Banxico) does in the coming months.

Among the geopolitical issues that affect the global economy, energy is almost always a factor, as was the case in Ukraine with the price of gas, he added.

“We believe that commodities will remain there, so the geopolitical issue becomes a risk, but not in the sense that it will affect oil supply in the central scenario. We already have the price of oil for us, which will be five dollars lower in 2025 compared to 2024, or even another five dollars in 2026. We no longer see anything affecting the global economy in terms of oil prices,” he added.

For the specialist, the configuration of globalization and the deglobalizationthat is being promoted is changing, which is negative for the world, particularly for the United States, and also for countries like Mexico that are heavily dependent on the external sector.

He said that the tariffs imposed by the United States are the highest in 100 years, since after “Liberation Day,” named by Trump, on April 2, they rose to 25% after having reached 2.5% in 2024, although the US president later backtracked, so he estimated that they are at approximately 13%, however, he estimated that they could go lower.

“We estimate they’re around 13%, which is hard to keep track of exactly, a lot, 13% versus 2.5%, but it already sounds reassuring compared to 25%. We think they’ll end up around 10%, with a lot of gaps here and there, and many exceptions,” he shared.

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El cargo Despite the tariff and geopolitical environment, there is optimism about the global economy: Banamex apareció primero en T21.

The threats of the President of the United States, Donald Trump , ended up being fulfilled, however, in Mexico they did not believe him because the imposition of tariffs was seen as “irrational,” considered Sergio Kurczyn , director of Economic Studies at Banamex , who added that in the world they also did not believe that Trump would carry out this action, so he estimated that the uncertainty about the tariff measure will prevail.

At the Banamex Dialogues event , Kurczyn said that in light of this situation, the forecast had to be changed and negotiations were reached with the Mexican government, which involves the deployment of 10,000 members of the National Guard on the country’s northern border. “The world did not believe Trump and neither did Mexico, because we see him as quite irrational,” he added.

Regarding the tariffs imposed by the northern neighbor on China, the specialist said that they are limited, which shows willingness to negotiate with Trump . He also explained that Mexico is a strong ally for the United States in confronting China.

In this regard, he recalled that in the past the imposition of tariffs on that Asian country was positive because Mexico gained nearly two percentage points of market share with the United States, although he indicated that currently there will be more pressure because, among other reasons, investments from China in Mexico will be discouraged.

He said the tariffs on Mexico, Canada and China are “eroding” the United States’ international leadership and also represent a violation of the United States-Mexico-Canada Trade Agreement (USMCA) .

On the economic front, he said that the global economy “is doing very well,” with growth of around 2.7% in the last two years, but the American economy “is doing better,” with a growth of 2.1% expected in 2025.

He pointed out that inflation in the United States has been declining and estimated that the Federal Reserve can lower interest rates even further, which are expected to be cut two more times and end at 4 percent.

The labor market in our northern neighbor is also “doing very well,” he said, noting that Mexican rates are following those of the United States.

For her part, Nydia Iglesias , director of Political Analysis at Banamex, considered that in the first few months “things have gone very well” for President Claudia Sheinbaum , according to survey results.

She said that this has been possible because she has been able to capture the trust of Mexicans, which has increased due to her closeness to the Fourth Transformation project, and because she has made changes in security policy.

“Sheinbaum has done well 100 days after her government began, even though she is not as charismatic as Andrés Manuel López Obrador, but she has inspired credibility and generated trust,” he said.

Iglesias said that after last weekend, which was complicated by the issue of tariffs, Sheinbaum showed herself to be in good spirits.

He added that Donald Trump has acted against the US Constitution , as well as international organizations, and has even hurt his own country. “Trump is capable of inflicting some damage on himself, even on the US economy, in order not to fail to fulfill any promises,” he stressed.

Mexico, throughout the Trump administration, will be facing potential crises, in the face of which Sheinbaum’s government could be strengthened; in addition, her administration should take advantage of the situation to warn of risks due to judicial reform , she said.

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El cargo Uncertainty over Trump tariffs will continue; it is an irrational measure: Banamex apareció primero en T21.