Banxico lifts 2025 growth outlook, pushes inflation goal to 2027

Mexico's central bank, Banxico, has revised its economic projections, raising the growth forecast for the current year while extending the expected timeline for inflation to reach its target.

The bank now projects GDP growth of 1.5% for 2025, an upgrade from its earlier estimate of 1.1%. However, the outlook for price stability has weakened, with headline inflation now expected to converge to the 3% target only in the fourth quarter of 2027—a later date than the previously anticipated second quarter of that year.

Banxico also adjusted its core inflation forecast for the fourth quarter of this year, nudging it up to 3.5% from 3.4%. Recent data shows headline inflation at 3.26% for the first half of August, with core inflation at 3.93%.

While the near-term growth picture has improved, the central bank trimmed its 2027 GDP growth projection to 2.0% from 2.1%. Banxico noted that economic activity continues to face a period of weakness, compounded by uncertainty surrounding the review of the USMCA trade agreement.