## IMF Executive Board Concludes 2025 Article IV Consultation with Mexico

_IMF News, October 27, 2025_

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## Bibliographic details
- Published: October 27, 2025

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### 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).*

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## References

- [Mexico and the IMF](http://www.imf.org/external/country/MEX/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [www.imf.org/Mexico](https://www.imf.org/en/Countries/MEX)
- [http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2025/10/27/pr-25350-mexico-imf-executive-board-concludes-2025-article-iv-consultation_