Mexico’s economy is projected to grow by 1.5 per cent in 2026 and 1.8 per cent in 2027, while a new staff assessment calls for a more credible route to lower public debt and continued restraint on inflation.
The assessment follows the 2026 Article IV mission, whose team held discussions in Mexico City from 7 to 15 September and continued with virtual meetings. It is a preliminary staff concluding statement rather than a final decision by the IMF’s Executive Board. A full report is due to be prepared for Board consideration, subject to management approval.
Growth is expected to recover after a weak 2025, helped by less restrictive fiscal and monetary policy, stronger exports to the United States and limited exposure to the global energy-price shock. Yet the outlook remains constrained chiefly by external uncertainty. The review highlights the coming USMCA review and recent domestic regulatory and institutional changes as factors likely to continue weighing on activity.
Its central fiscal message is that consolidation is continuing, but that greater effort is needed to put debt on a declining path. The draft 2027 budget contains a more gradual consolidation than previously announced and implies an upward debt trajectory over the coming years. The staff view is that a more ambitious, front-loaded approach would rebuild policy space and better secure the downward direction of debt.
A clearer early plan for the measures behind the consolidation would strengthen its credibility. The assessment points to revenue mobilisation, improved spending priorities and greater private-sector participation as ways to protect investment in infrastructure and health. It also sets out potential options including better targeting of social programmes, a gradual withdrawal of fuel subsidies, firmer finances at Pemex, broader property and vehicle taxation, changes to border tax incentives, a stronger carbon tax, personal-income-tax reform and measures that encourage formal employment.
The statement welcomes plans to lift infrastructure investment but stresses safeguards around public finances. It identifies the need to keep projects consistent with fiscal sustainability and the budget envelope, alongside stronger controls over deferred expenditure recognition, contingent liabilities and multi-year commitments. It also suggests a strengthened fiscal framework, potentially including a medium-term debt anchor, correction mechanisms, binding escape clauses and an independent fiscal council.
On prices, headline inflation is near target, but core pressures and inflation expectations remain elevated. The staff assessment calls for a moderately tight monetary stance until there is clear evidence that inflation is moving durably towards the 3 per cent target. It warns that a stall in disinflation, or renewed energy and food shocks, could require further tightening. The projected durable return to target is not until early 2028.
The review judges the financial system sound, with banks holding capital and liquidity buffers, while urging continued monitoring of the relationship between the sovereign and banks. It also calls for stronger anti-money-laundering and counter-terrorist-financing implementation, deeper financial intermediation and close attention to the growth of digital banks, non-bank entities and pension assets.
Longer-term growth, in the assessment’s view, depends on closing infrastructure gaps, reducing regulatory burdens and uncertainty, and strengthening predictable, rules-based trade integration. It also identifies security, anti-corruption work, judicial predictability and lower informality as important to investment. These are staff projections and recommendations, not commitments or final policy decisions by the Mexican authorities or the IMF Executive Board.
