Mexico: Staff Concluding Statement of the 2025 Article IV Mission
IMF News, September 19, 2025
Source details
- Canonical URL
- Mexico: Staff Concluding Statement of the 2025 Article IV Mission
Other formats
Bibliographic details
- Published: September 19, 2025
Key Messages
- Economic activity remains soft with the economy projected to grow by 1.0 percent this year, accelerating somewhat in 2026.
- Further deficit reduction, and policy measures to support that adjustment, are needed going forward to prevent further upward drifts in public debt and create fiscal space to respond to possible shocks.
- Monetary easing should continue once it becomes clearer that inflation is on a path to the 3 percent target.
- Financial stability risks appear low and plans to foster competition and financial deepening are welcome.
- Mexico’s long-term economic success hinges on closing infrastructure gaps, strengthening the rule of law, and deepening integration with global trading partners.
Macroeconomic Outlook
- Growth and inflation
- Growth is expected to slow in 2025. Headline inflation is moderating and expected to converge to Banxico’s 3-percent target in the second half of 2026.
- Near-term risks to activity are broadly balanced: downside risks include escalating trade tensions and tighter global financial conditions; upside risks include stronger-than-expected U.S. demand and resolution of tariff uncertainties (including a favorable USMCA review and greater use of USMCA preferences).
- Inflation risks remain tilted to the upside (services inflation persistence, reversal of food disinflation, peso depreciation raising goods prices).
- Selected projections (Table 1, National Accounts, annual percent change)
- GDP: 2024 = 1.4; 2025 = 1.0; 2026 = 1.5
- Consumption: 2024 = 2.6; 2025 = 0.5; 2026 = 1.8
- Private consumption: 2024 = 0.4; 2025 = 1.7; 2026 = (not separately provided for 2026 in table aside from "Private" row)
- Investment: 2024 = 3.3; 2025 = -5.1; 2026 = 1.2
- Exports of goods and services: 2024 = 9.5; 2025 = -7.2; 2026 = 6.6
- Imports of goods and services: 2024 = 8.6; 2025 = 4.2; 2026 = 3.5
- External and monetary backdrop
- External current account balance (percent of GDP): 2024 = -0.9
- Gross international reserves (billions of U.S. dollars): 2023 = 214.4; 2024 = 232.1; 2025 = 242.7; 2026 = 252.5
- Consumer prices (end-of-period): 2023 = 4.7; 2024 = 3.0
- Core consumer prices (end-of-period): 2023 = 8.3; 2024 = 3.6
- National unemployment rate (annual average): 2023 = 3.1
Fiscal Policy — Findings and Recommendations
- Current stance and risks
- The 2025 deficit (Public Sector Borrowing Requirement) is projected to reach 4.3 percent of GDP—compared to a 3.9 percent programmed target—appropriately unwinding the 2024 spending increase.
- Deficit targets in the 2026 draft budget would imply a steady rise in gross debt-GDP over time—reaching about 61.5 percent of GDP by 2030, under IMF staff’s macroeconomic assumptions—leaving debt dynamics vulnerable to shocks.
- Gross public sector debt: 2021 = 56.7; 2022 = 53.8; 2023 = 52.6; 2024 = 58.3; 2025 = 58.9; 2026 = 59.9
- Policy recommendation priorities
- A more front-loaded and ambitious consolidation path is needed to enhance credibility, prevent further upward drift in public debt, and create fiscal space. A deficit of 2.5 percent of GDP by 2027—about 1 percent of GDP below the current budget target—would achieve these objectives.
- Concrete measures of around 1½ are needed to underpin this consolidation.
- Revenue and expenditure measures suggested
- Mobilize tax revenues through administrative improvements (tackling informality and VAT leakages) and tax policy changes.
- Policy options: increasing the progressivity of the personal income tax, eliminating tax expenditures, raising and broadening the coverage of the carbon tax and mining royalties.
- Strengthen property and vehicle taxation at state and municipal levels to free up federal resources.
- State-owned enterprises (SOEs)
- Durably strengthening SOEs’ finances and profitability is key to lowering the public debt-GDP ratio.
- Plans for Pemex: foster private partnerships, reduce operational costs, smooth debt maturity profile; implementation must be transparent and judicious as operations create contingent liabilities.
- Pemex and Comisión Federal de Electricidad social objectives should be clearly separated from commercial activities and reported transparently as fiscal activity.
- Fiscal framework enhancements
- Introduce a binding medium-term debt anchor and corrective mechanisms for deviations from the associated PSBR path.
- Establish an independent fiscal council to assess macro-fiscal forecasts, fiscal rules methodologies, and compliance.
- Expand coverage of the structural current spending rule and holistically calibrate stabilization funds.
Monetary Policy — Findings and Recommendations
- Current assessment
- Core inflation and inflation expectations remain stable but above target. Inflationary pressures have decreased substantially since the post-pandemic episode.
- Recent monetary easing has been appropriate given declining inflationary pressures, weakening economic activity, and a stronger peso.
- Policy guidance
- Further monetary easing should be implemented once it becomes clearer that inflation is on a path to the 3 percent target. Additional interest rate cuts should follow clear signs that core inflation and inflation expectations are moving towards the 3 percent inflation target.
- Communication improvements recommended
- Publish alternative scenarios with macroeconomic assumptions and associated interest rate paths (framed as indicative and conditional).
- State when the interest rate would reach neutral and explain how inflation expectations inform decisions.
- Tailor messages to different audiences and expand household surveys to inform communication strategy.
- Exchange rate stance
- The exchange rate should continue to be a shock absorber. The peso is supported by healthy external buffers and an external position broadly in line with fundamentals.
- The Foreign Exchange Commission’s commitment to exchange rate flexibility and limited interventions is appropriate.
Financial Sector Policies — Findings and Recommendations
- System resilience
- Mexico’s banking system remains sound with robust capital and liquidity positions. Stress tests indicate banks can withstand a sharp economic slowdown. Corporate and household leverage is low; no signs of stretched asset valuations.
- Financial inclusion and lending
- Efforts to foster financial inclusion and expand lending should promote competition among intermediaries.
- Plans to boost mortgage and SME lending via development banks and INFONAVIT should be transparent, mindful of fiscal implications, and ensure space for private sector participation.
- Advance open finance initiatives, address fragmented supervisory responsibilities, and improve interagency coordination to ensure a level playing field.
- Calibrate capital risk weights to maintain stability while preserving room for credit expansion; strengthen creditor rights to foster commercial lending.
- Macroprudential and supervisory improvements
- Continue implementing the 2022 Financial System Stability Assessment recommendations.
- Establish principles for activating countercyclical capital buffers.
- Set limits and monitor household debt-service-to-income and loan-to-value ratios.
- Improve inter-agency coordination, update disclosure requirements for financial conglomerates, and address pending bank resolution framework recommendations.
- AML/CFT
- Continue addressing weaknesses in the AML/CFT framework, especially related to organized crime.
- Strengthen interagency coordination (supervisory, intelligence, law enforcement) and risk-based supervision.
- Build on the 2023 National Risk Assessment to identify and address emerging threats, including infiltration of organized crime in productive sectors.
- AML/CFT investigations should be concluded quickly; strengthen national and international coordination for cross-border supervisory and investigative actions.
Supply-Side Reforms — Findings and Recommendations
- Trade openness and external integration
- Preserving trade openness is key. Resolving tensions with the U.S.—including through a favorable review of the USMCA—would support investor confidence and supply chain continuity.
- Avoid trade-distorting measures (e.g., product-specific import duties) to prevent resource misallocation. Expand and diversify partnerships with a range of trading partners.
- Addressing supply-side constraints to boost growth and reduce poverty
- Priority: close infrastructure gaps in energy, transport, telecommunications, and water. Given fiscal constraints, private sector participation is essential, requiring improved investment climate and streamlined business procedures.
- Support to strategic sectors (including under Plan Mexico) should be narrowly targeted and focused on market failures.
- Raise human capital and address low female participation and informality.
- Caution: plans to further increase the minimum wage and reduce the working week should carefully consider impacts on employment and informality, particularly for lower income workers.
- Rule of law and governance
- Strengthening the rule of law is essential; crime is a key constraint on growth and should be tackled through stronger international cooperation and more effective action against drug trafficking.
- Governance reforms need progress: replacement of Instituto Nacional de Transparencia, Acceso a la Información y Protección de Datos Personales with the Anticorruption and Good Governance Secretariat and Secretaria de Transformación Digital should be followed by steps to dispel concerns about autonomy.
- Address resource constraints and institutional capacity gaps (e.g., Secretaría Ejecutiva del Sistema National Anticorrupción), obstacles to asset declaration verification, and finalize whistleblower protection legislation.
- Judicial reform moving from career-based appointments to popular elections should include safeguards to ensure transparency, professionalism, and accountability.
Selected Economic, Financial, and Social Indicators (highlights from Table 1)
- I. Social and Demographic Indicators
- GDP per capita (U.S. dollars, 2024): 14,034.2
- Poverty headcount ratio (% of population, 2024) 1/: 29.6
- Population (millions, 2024): 132.3
- Income share of highest 20 perc. / lowest 20 perc. (2022): 8.4
- Life expectancy at birth (years, 2024): 75.5
- Adult literacy rate (2020): 95.2
- Infant mortality rate (per thousand, 2023): 13.6
- Gross primary education enrollment rate (2022) 2/: 102.0
- II. Economic Indicators — Selected series and levels
- GDP (annual percent change): 2021 = 6.0; 2022 = 3.7; 2023 = 3.4; 2024 = 1.4; 2025 = 1.0; 2026 = 1.5
- Exports of goods, f.o.b. 4/: 2021 = 18.6; 2022 = 4.2; 2023 = 3.5
- Imports of goods, f.o.b. 4/: 2021 = 32.0; 2022 = 19.8; 2023 = -0.1; 2024 = 5.1
- External current account balance (percent of GDP): 2021 = -0.3; 2022 = -1.3; 2023 = -0.7; 2024 = -0.9
- Nominal GDP (billions of pesos): 2021 = 26,690; 2022 = 29,526; 2023 = 31,936; 2024 = 33,981; 2025 = 36,085; 2026 = 38,299
- Gross public sector debt: see Fiscal Policy section above for annual values.
- Output gap (in percent of potential GDP): 2024 = -2.0; 2025 = 0.7
Source: IMF staff concluding statement of the 2025 Article IV mission (September 19, 2025).