Societe Generale’s Dev Ashish projects that Mexico's economic growth in 2026 will remain below its potential, primarily due to weak manufacturing, subdued investment, and ongoing uncertainty related to the United States-Mexico-Canada Agreement (USMCA) [1]. The report highlights that higher oil prices are expected to pass through to the economy, raising both inflation risks and expectations [1].
On the monetary policy front, the Bank of Mexico (Banxico) is characterized as dovish at present, but is likely to delay further easing measures until 2027 [1]. This cautious stance is attributed to the elevated inflation risks and the uncertain external environment, including potential slowdowns in the US economy and unresolved USMCA issues [1].
Fiscal policy is also under scrutiny, with Societe Generale noting that while Mexico's budget goals are achievable, rising social spending is limiting the scope for fiscal consolidation [1]. The report identifies oil prices, US economic performance, and USMCA-related uncertainty as key risks that could impact both inflation and growth trajectories going forward [1].
CONCLUSION
Societe Generale expects Mexico's growth to remain subdued through 2026, with inflation risks heightened by oil prices and external uncertainties. Banxico is likely to delay further monetary easing until 2027, while fiscal consolidation remains constrained by increased social spending. The outlook is cautious, with multiple risk factors threatening both inflation and growth.