OECD Cuts Mexico’s 2026 Growth Forecast Below Central Bank View
Mexico · Economy
Key Facts
—The cut: The OECD lowered its 2026 growth forecast for Mexico to 0.8%, down from 1.3% in March.
—Below the bank: The new figure sits under the Bank of Mexico’s 1.1% projection, making the OECD one of the gloomier outside voices.
—The trigger: The body cited a sharp first-quarter contraction, with seasonally adjusted output down 0.6%.
—The fiscal flag: The OECD urged spending restraint, with the broadest measure of the public deficit running above 4% of GDP.
—Recovery view: Growth is seen rebounding to about 1.8% in 2027, led by domestic demand and a low jobless rate.
The OECD has sharply lowered its growth forecast for Mexico, Latin America’s second-largest economy, placing its outlook below that of the country’s own central bank after a weak start to the year.
In an update to its Economic Outlook, the Paris-based organization said it now expects Mexico’s gross domestic product to expand just 0.8% this year, down from the 1.3% it projected in March. The downgrade reflects a steep contraction at the start of 2026 and joins a string of cautious assessments of an economy squeezed by US trade uncertainty and a tightening fiscal stance.
Why the OECD cut Mexico’s growth forecast
The organization pointed to a first-quarter slump, with output falling 0.6% from the previous quarter on a seasonally adjusted basis, as activity weakened after a firmer end to 2025. It said private investment and consumption had cooled and flagged trade tensions and global policy uncertainty as continuing risks. The new projection is notable because it sits below the Bank of Mexico’s own 1.1% estimate, as well as private forecasts from banks such as Banorte and BBVA, marking the OECD as one of the more downbeat institutional voices on the economy.
Fiscal pressure under the spotlight
The OECD said Mexico’s headline budget deficit had narrowed to 3.9% of GDP in 2025 and should keep falling toward 3.6% this year and 3.2% in 2027, but it warned that the broadest measure of public borrowing, which the finance ministry estimates at around 4.1% of GDP, points to slippage in the consolidation drive of President Claudia Sheinbaum’s government. Credit-rating agencies have kept Mexico’s public finances under close watch, citing slow deficit reduction, soft growth and a deceleration in tax revenue, and have questioned how quickly the government can rebuild fiscal room. The OECD recommended strengthening revenue, improving the quality of spending and targeting energy-related support to the households and small firms most affected.
What the forecast means for the year ahead
Despite the downgrade, the OECD expects a recovery to around 1.8% in 2027, driven mainly by domestic demand and supported by low unemployment and easing inflation. It sees consumer-price growth slowing from 3.9% in 2026 toward 3.2% the following year, still above the central bank’s 3% target. The body advised keeping monetary policy data-dependent, leaving room for further rate cuts only if the disinflation path holds. A weaker Mexican growth path also has regional reach, pulling down trade volumes with Brazil, Argentina, Chile and Colombia, since Mexico is the second-largest economy in Latin America. For investors, the message is an economy near stall speed this year, with the rebound resting on consumption and a still-uncertain external backdrop shaped heavily by US trade policy.
Frequently Asked Questions
What is the OECD’s new growth forecast for Mexico?
The OECD now projects 0.8% growth for Mexico in 2026, down from 1.3% in March, with a recovery to about 1.8% in 2027.
Why is the figure below the central bank’s?
A sharp first-quarter contraction led the OECD to a gloomier view than the Bank of Mexico’s 1.1% projection.
What does the OECD say about Mexico’s deficit?
It warned that the broadest measure of public borrowing, near 4.1% of GDP, points to slippage in fiscal consolidation, and urged stronger revenue and spending discipline.
Will inflation keep falling in Mexico?
The OECD sees inflation easing from 3.9% in 2026 toward 3.2% in 2027, still above the central bank’s 3% target.
Connected Coverage
The downgrade tracks the central bank’s own caution set out in the Banxico growth cut and Moody’s downgrade, and forms part of the same OECD release covered in the body’s downgrade of Argentina’s outlook.
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