IMF Executive Board Concludes 2025 Article IV Consultation with Mexico
IMF News, October 27, 2025
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- Published: October 27, 2025
Overview
- Executive Board completed the Article IV Consultation for Mexico on October 23.
- Authorities consented to the publication of the Staff Report prepared for this consultation.
- Press Release No. 25/350; published October 27, 2025.
Growth and Inflation
- Economic activity remains soft.
- Projected real GDP growth:
- 2024: 1.4 percent
- 2025: 1.0 percent
- 2026: 1.5 percent
- After expanding by 1.5 percent in 2024 (text reference), growth is constrained in 2025 by needed fiscal consolidation, restrictive monetary policy, and trade uncertainty dampening consumption and investment.
- Activity expected to pick up to 1.5 percent in 2026 as domestic policies ease, though tariffs and trade uncertainty will continue to constrain growth.
- Inflation trajectory:
- Consumer prices, end of period:
- 2024: 4.2 percent
- 2025: 3.7 percent
- 2026: 3.0 percent
- Consumer prices, period average:
- 2024: 4.7 percent
- 2025: 3.9 percent
- 2026: 3.3 percent
- Headline inflation is moderating and expected to converge to Banxico’s 3-percent target in the second half of 2026.
- Recent appreciation of the peso and normalizing food prices expected to support convergence.
Fiscal Outlook and Public Debt
- Fiscal stance:
- The fiscal expansion of 2024 is expected to be reversed in 2025.
- Authorities’ fiscal targets for 2026-30 entail additional deficit reduction, but debt-to-GDP would rise steadily over the medium term.
- Key fiscal figures:
- Revenue and grants (% GDP):
- 2024: 24.6
- 2025: 24.2
- Expenditure (% GDP):
- 2024: 30.3
- 2025: 28.5
- 2026: 28.3
- Overall fiscal balance (% GDP):
- 2024: -5.7
- 2025: -4.3
- 2026: -4.1
- Gross public sector debt (% GDP):
- 2024: 58.3
- 2025: 58.9
- 2026: 59.9
- Recommendation: More ambitious and front-loaded fiscal consolidation, with policy measures to support it, is needed to prevent further upward drifts in public debt and create fiscal space to respond to possible shocks.
- Directors’ emphasis:
- Consider mobilizing tax revenues through improvements in tax administration and tax policy changes.
- Protect social spending and growth-enhancing public investment.
- Strengthen financial health and profitability of state-owned enterprises, especially Pemex.
- Strengthen the medium-term fiscal framework to enhance credibility.
Monetary Policy and Financial Sector
- Banxico actions:
- Has cut interest rates by 375 basis points since early-2024, in tandem with the decline in inflation.
- Monetary policy remains moderately contractionary.
- Policy guidance:
- Monetary easing should continue once it becomes clearer that inflation is on a path to the 3 percent target.
- Directors agreed further monetary easing should follow clear signs that inflation is on a sustained path to the target.
- Directors suggested further refinements to Banxico’s communication toolkit to strengthen monetary policy transmission and better anchor inflation expectations, while safeguarding flexibility and maintaining credibility.
- Maintaining a flexible exchange rate is critical to absorb shocks.
- Financial sector:
- Financial system remains sound and resilient to shocks, amid effective financial supervision.
- Directors highlighted strong capital and liquidity positions.
- Encouraged continued implementation of recommendations from the 2022 Financial Sector Assessment Program.
- Emphasized financial inclusion and expanding credit should focus on addressing market failures and promoting competition.
- While acknowledging progress in AML/CFT framework, Directors stressed need to further strengthen interagency coordination and risk-based supervision to combat financial crimes and money laundering.
External Sector and External Buffers
- Mexico maintains adequate external buffers and an external position in line with fundamentals.
- Near-term strengthening of the current account—due to weak domestic demand—is expected to unwind going forward.
- Expected patterns:
- Mild deterioration of the trade balance.
- Gradual decline in remittances.
- Key external figures:
- Current account balance (% GDP):
- 2024: -0.9
- 2025: -0.2
- 2026: -0.3
- Foreign direct investment (% GDP):
- 2024: 1.7
- 2025: 1.1
- Gross international reserves (US$ billions):
- 2024: 232.1
- 2025: 249.7
- 2026: 259.0
- In months of next year's imports of goods and services:
- 2024: 4.1
- Total external debt (% GDP):
- 2024: 24.5
- 2025: 25.6
- 2026: 24.8
- REER (% change):
- 2024: 0.2
Structural and Supply-Side Issues
- Mexico’s potential growth hinges on:
- Closing infrastructure gaps.
- Strengthening the rule of law.
- Deepening integration with global trading partners.
- Directors underscored that unlocking stronger growth requires addressing long-standing supply-side constraints:
- Improve the business climate.
- Strengthen judicial independence.
- Tackle corruption and crime.
- Maintain open trade as an engine of growth.
- Policy support for strategic sectors should be narrowly targeted to address market failures and avoid introducing barriers to trade and investment.
Executive Board Assessment and Policy Recommendations
- Directors highlighted Mexico’s strong fundamentals and track record of very strong policies and policy frameworks as instrumental to economic resilience.
- Key recommendations and views from Directors:
- Maintain sound macroeconomic policies while advancing supply-side reforms to bolster potential growth.
- Consider a more ambitious fiscal consolidation to prevent further upward drifts in public debt and create fiscal space for future shocks; some Directors favored a more gradual path to stabilize debt while preserving growth momentum.
- Focus consolidation on mobilizing tax revenues, protecting social spending, and growth-enhancing public investment.
- Strengthen state-owned enterprises’ financial health, especially Pemex.
- Continue monetary policy easing only when inflation shows sustained convergence to target; consider refinements to Banxico’s communication toolkit.
- Maintain flexible exchange rate.
- Continue financial sector reforms and AML/CFT improvements, with stronger interagency coordination and risk-based supervision.
- Promote financial inclusion and competition to expand credit.
Key Country Indicators (selected)
- Population (millions, 2024): 132.3
- GDP per capita (U.S. dollars, 2024): 14,034
- Quota (SDR, millions): 8,912.7
- Poverty headcount ratio (% of population, 2024): 29.6
- Main export products: cars and car parts, electronics, crude oil
- Main import products: cars and car parts, electronics, refined petroleum
- Key export markets: United States, EU and Canada
- Key import markets: United States, China, EU
- Employment — Unemployment rate, period average (%):
- 2024: 2.7
- 2025: 2.9
- 2026: 3.1
- Monetary and credit:
- Broad money (% change):
- 2024: 13.8
- 2025: 5.5
- 2026: 5.8
- Credit to non-financial private sector (% change):
- 2024: 11.3
- 2025: 4.0
- 2026: 5.0
- 1-month Treasury bill yield (in percent):
- 2024: 10.7
Source: IMF Executive Board press release — IMF Executive Board Concludes 2025 Article IV Consultation with Mexico (Press Release No. 25/350, October 27, 2025).