The Executive Board of the International Monetary Fund (IMF) has concluded its 2025 Article IV Consultation with Mexico, following discussions held on October 23. The Mexican authorities have agreed to publish the staff report prepared for this consultation, which will be available on the IMF's website.
According to the IMF, Mexico’s economy expanded by 1.5 percent in 2024 and is projected to grow by 1.0 percent in 2025. The slower growth outlook is attributed to fiscal consolidation measures, restrictive monetary policy, and ongoing trade uncertainty affecting consumption and investment. Economic activity is expected to recover somewhat in 2026 as domestic policies become less restrictive, but trade-related challenges are likely to persist.
Inflation is anticipated to converge toward Banxico’s target of three percent by the second half of 2026, supported by subdued economic activity, stabilizing food prices, and a stronger peso. In response to declining inflation since early 2024, Banxico has reduced interest rates by a total of 375 basis points but maintains a moderately contractionary stance.
The reversal of fiscal expansion seen in 2024 is expected this year; however, gross public sector debt is projected at nearly 59 percent of GDP by year-end. Fiscal targets for the period through 2030 include further deficit reduction efforts, though debt levels are set to rise steadily over the medium term.
The IMF noted that Mexico’s financial system remains resilient due to effective supervision and strong capital positions. External buffers are considered adequate and external accounts broadly aligned with fundamentals.
Executive Directors highlighted Mexico’s robust policy frameworks as key factors supporting economic resilience amid global uncertainty. They stressed maintaining sound macroeconomic policies while advancing supply-side reforms for long-term growth.
Directors welcomed recent fiscal adjustments but encouraged consideration of more ambitious consolidation efforts to limit further increases in public debt and ensure readiness for future shocks. Some Directors emphasized balancing debt stabilization with growth momentum through gradual consolidation paths. They recommended focusing on tax revenue mobilization via improved administration and policy changes while safeguarding social spending and productive investment.
Strengthening state-owned enterprises’ financial health—particularly Pemex—and enhancing medium-term fiscal planning were also identified as priorities for credibility.
On monetary policy, Directors commended Banxico for returning inflation within its tolerance range but advised that further easing should depend on clear evidence that inflation remains on track toward target levels. Enhancing communication strategies was suggested as a way to reinforce monetary transmission mechanisms and anchor expectations effectively.
Maintaining exchange rate flexibility was deemed critical for absorbing external shocks under current conditions.
Directors also called attention to continued implementation of recommendations from the IMF’s previous Financial Sector Assessment Program (FSAP), fostering financial inclusion through competition-driven credit expansion, and improving anti-money laundering oversight through better interagency coordination.
For sustained growth prospects, Directors pointed out persistent supply-side constraints such as infrastructure gaps, business climate challenges, judicial independence issues, corruption concerns, and crime rates. Open trade was identified as essential for growth; support measures should remain targeted at market failures without creating new barriers.
Key indicators show that Mexico had a population of approximately 132 million in 2024 with GDP per capita at $14,034 USD. The poverty headcount ratio stood at nearly thirty percent of the population last year. Main exports include cars/parts and electronics primarily destined for markets like the United States—the country’s largest trading partner—as well as Canada and EU members; imports mirror these categories with significant flows from China alongside traditional partners.
Under Article IV consultations—mandated annually—the IMF reviews member countries’ economic developments through direct engagement before reporting findings back via its Executive Board.
"Executive Directors highlighted that Mexico’s strong fundamentals and track record of very strong policies and policy frameworks have been instrumental to the resilience of the economy in the face of heightened global uncertainty. In light of the deceleration in economic activity and remaining risks, Directors underscored the importance of maintaining sound macroeconomic policies while advancing supply side reforms to bolster potential growth."
"Directors welcomed the reversal of the 2024 fiscal expansion, and generally encouraged the authorities to consider a more ambitious fiscal consolidation to help prevent further upward drifts in public debt and create fiscal space to respond to future shocks. However, a number of Directors highlighted the need to stabilize debt while preserving growth momentum, which could be achieved through a more gradual fiscal consolidation path. Directors underscored that, given the need to protect social spending and growth enhancing public investment, consolidation efforts should focus on mobilizing tax revenues through improvements in tax administration and tax policy changes. Strengthening the financial health and profitability of state-owned enterprises especially Pemex will also be essential. Directors stressed that strengthening the medium-term fiscal framework would enhance credibility."
"Directors commended Banxico for successfully bringing inflation back into tolerance range... They considered that further monetary easing should follow clear signs that inflation is on a sustained path... Maintaining flexible exchange rate is critical..."
"Directors highlighted soundness... supported by strong capital/liquidity positions... encouraged authorities continue implementing recommendations [from] FSAP... foster inclusion/expand credit via competition... strengthen AML/CFT supervision..."
"Unlocking stronger growth requires addressing long-standing supply-side constraints: closing infrastructure gaps; improving business climate; strengthening judicial independence; tackling corruption/crime... Open trade important engine... Policy support [should] remain narrowly targeted..."
Further details about Article IV consultations can be found at https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/16/46/Article-IV-Consultations.