Bank of Mexico
El Financiero, May 30th, 2025
As you already know, the Bank of Mexico is projecting virtually zero growth for this year. That was the front-page headline of this newspaper yesterday. However, for 2026, they are lowering their previous estimate even further, from 1.8% to 0.9%. Interestingly, these adjustments are getting closer to what this column had suggested as a possibility for the 2024–2027 period: annual growth of 0.4%.
In fact, between December 2023 and 2024, growth was already just 0.5%, and with the two estimates presented by the Bank of Mexico, something similar is expected over the next two years—very close to the figure I mentioned.
The cause of this downgrade is, in part, the international disruption triggered by Donald Trump with his illogical tariff policies, which were then just as arbitrarily reversed. The British newspaper Financial Times has been mocking him, suggesting that instead of The Art of the Deal (the title of Trump’s book), what we’re really seeing is TACO trade policy: Trump Always Chickens Out—a reference to his backpedaling a few days after “Liberation Day,” when the markets seriously threatened the dollar’s position.
Yesterday, the U.S. Court of International Trade ruled that those tariffs, arbitrarily imposed by Trump, must be eliminated, because he cannot invoke the excuse of an economic emergency as he has been doing. We have no idea what will happen now—and that’s exactly the problem we’ve had for the last three months.
Uncertainty leads to delayed investment decisions, reduced production, and all of that hurts the entire planet. We’re getting a share of that impact, which is why the Bank of Mexico is lowering its projections. But they clarify that they’re taking a conservative stance here, precisely because it’s impossible to know what the effect of the tariffs will be on our exports. This means that part of the correction in their forecasts is not due to Trump’s actions, but rather the dynamics of our own economy—the basis for the estimate I presented to you a few days ago.
The trends in both consumption and investment are very clear. For the month of April, we can infer them based on the behavior of imports of these goods, and the pattern from previous months continues. Since there are no reasons for an increase in investment—and thus in employment—we should expect the total wage bill to begin to decline, and with it, consumption. In other words, there is no sign that the internal direction of the economy might change. If anything, it may worsen as the deterioration of public finances further limits government intervention.
That’s the only domestic risk perceived by the Bank of Mexico: public finances. All the other downside risks come from the international environment (plus the usual one: the weather). Because of all this, I believe this correction by the Bank—which is very welcome because it will force the Finance Ministry to be more cautious with its figures—is still on the optimistic side. This is very clear from their projections for formal employment: between 100,000 and 300,000 new jobs this year, when by May there weren’t even 70,000. With a bit of bad luck, by December we may have lost 250,000 jobs, with the corresponding impact on consumption and growth.
I believe the Bank of Mexico cannot, so quickly, send such negative signals—especially when the Finance Ministry has been insisting on unbelievable growth. Therefore, I think that in the next quarterly report, we’ll be served a new dose of reality.