Source: GlobalData
Mexico is grappling with rising risks stemming from strained relations with the US during President Donald Trump’s second term. Trump’s “America First” policies, including a proposed 25% tariff on Mexican goods, pose a significant threat to Mexico’s export sector and could disrupt North American supply chains. Weak domestic demand is also expected to further hinder Mexico’s economic growth. Against this backdrop, Mexico’s GDP growth is forecast to slow to 1.1% in 2025, down from 1.5% in 2024 and 3.2% in 2023, according to GlobalData, a leading data and analytics company.
GlobalData’s latest report, “Macroeconomic Outlook Report: Mexico”, reveals that domestic demand in Mexico is expected to remain subdued due to a rising unemployment rate. Real household consumption expenditure growth is projected to decline to 1.8% in 2025, down from 2.0% in 2024 and 4.3% in 2023. Meanwhile, the unemployment rate is forecast to increase to 3% in 2025, compared to 2.7% in 2024 and 2.8% in 2023.
Mexico’s central bank, Banco de México, reduced the key policy rate six times since March 2024. The most recent cut occurred in February 2025, when the Governing Board lowered the overnight interbank interest rate by 50 basis points to 9.5%, driven by easing inflationary pressures. Inflation in January 2025 dropped to a four-year low of 3.6%.
Gayatri Ganpule, Economic Research Analyst at GlobalData, comments: “Mexico’s economic growth in 2025 is likely to encounter significant challenges, including uncertainty under a new US presidency and evolving global geopolitical dynamics. The US policy shifts, such as tariffs and immigration reforms, are expected to adversely impact trade and remittances. Investor sentiment may be further weakened by controversial judicial reforms, while Pemex’s financial struggles under revised energy policies could add to the economic strain. Additionally, rising public debt poses a risk of losing the nation’s investment-grade rating. As such, strategic actions will be essential to ensure stability.”
In terms of sectors, mining, manufacturing, and utility activities contributed 26.2% to Mexico’s gross value added (GVA) in 2024, followed by wholesale, retail, and hotels business activities (23.9%), and financial intermediation, real estate, and business activities (16.2%). In nominal terms, the three sectors are forecast to grow by 6.5%, 7.6%, and 7.4%, respectively, in 2025, compared to an estimated 6.8%, 8%, and 7.8% growth in 2024.
Ganpule adds: “The external sector is expected to face challenges as proposed tariff measures could sharply increase costs, disrupt the automotive and agriculture industries, and threaten millions of jobs across North America. Additionally, potential retaliatory actions from Mexico, as warned by President Claudia Sheinbaum, could further strain trade relations.”
According to GlobalData analysis using data from ITC Trade Map, vehicles and auto parts accounted for 27.6% of Mexico’s total exports to the US in 2023, followed by 19.5% for electrical machinery and 17.4% for nuclear reactors, boilers, and mechanical appliances. Trump’s proposed tariff could severely impact these sectors, disrupting trade and supply chains.
Ganpule continues: “The automotive industry, Mexico’s largest exporter, faces significant risks. Major automakers like Ford, Volkswagen, Toyota, Honda, General Motors, and Stellantis operate large manufacturing plants in Mexico, and tariffs could threaten exports, production, and investment stability.”
Beyond autos, Mexico’s state-owned oil company, Pemex, relies heavily on the US for its sales and could see revenue declines. In consumer goods, companies like Controladora Mabe (home appliances) and Becle (tequila producer) are particularly vulnerable, with a hefty share of their revenues coming from US sales. The agribusiness sector could also feel the impact, affecting firms such as Grupo Bimbo, Sigma Alimentos, Gruma, and Arca Continental, though their US operations may provide some buffer.
Mexico’s 2025 budget prioritizes fiscal discipline, aiming to reduce the budget deficit to 3.9% of GDP from 5.9% in 2024. The government plans significant spending cuts across sectors like defense, security, and the environment while focusing on achieving a primary budget surplus to ensure fiscal sustainability alongside economic growth and social development.
Mexico ranked 82nd out of 153 nations in the GCRI Q4 2024 update, with an overall risk score of 57.8, placing it in the medium-risk category (scores between 40 and 60). This indicates a higher risk than the North American average of 43.8 and the global average of 55.0.
Ganpule concludes: “Mexico’s economic trajectory depends on proactive fiscal policies, investment climate improvements, and strategic international negotiations. Strengthening trade alliances with other global partners and fostering domestic innovation will be crucial in mitigating external risks and ensuring long-term growth.”