By Gabriel Burin
BUENOS AIRES, April 20 (Reuters) – Mexico’s economy will remain stuck in mild stagflation in 2026, a Reuters poll of economists found, held back by uncertainty over its trade deal with the U.S. and Canada.
Latin America’s No. 2 economy is forecast to log a third consecutive year of growth under 2% with inflation close to or at the limit of the central bank’s target in 2026, the longest streak of such conditions since 2001-2003.
Mexico should begin to emerge from the current period of near-stagnation and relatively high inflation next year, the poll showed.
This year, gross domestic product is set to grow 1.5%, accelerating from last year’s 0.6% growth, according to the median estimate of 35 analysts polled between April 13 and April 17.
The 2026 forecast was slightly above a 1.3% rate predicted in a January poll, while the 1.9% median estimate for 2027 was the same as in the previous survey.
Grupo Banorte economists wrote in a report on Friday they were optimistic about trade as well as positive effects from the football World Cup in June-July, and expected an acceleration in public investment.
However, consensus forecasts for average annual inflation rose to 4.0% from 3.8% this year and to 3.8% from 3.7% in 2027, partly due to the impact of the U.S.-Israeli war with Iran on energy prices.
Mexico’s central bank has an inflation target of 3%, plus or minus a percentage point. The consensus view in the poll was it would end a long easing cycle this quarter with one last 25 basis-point interest rate cut to 6.50%.
TRADE DEAL SCENARIOS
On the future of the deal with Mexico’s North American trading partners, Rodolfo Mitchell, Scotiabank’s Mexico head economist, said the most favorable scenario for the country would be a ratification of the current scheme.
A second best for Mexico may be an inconclusive negotiation this year but with a possible agreement on a system of annual reviews of the USMCA agreement.
“The worst-case scenario would be a formal renegotiation of the treaty since Mexico has very limited room for negotiation and would probably end up accepting most of the changes proposed by the U.S.,” Mitchell said.
This may include stricter rules of origin for U.S. products as well as non-trade provisions like migratory arrangements that would be “clearly negative as it would politicize USMCA and reduce its legal certainty.”
Alfredo Coutino, director at Moody’s Analytics, said a trade agreement in the second half of the year, past a July 1 deadline, was more likely than no agreement.
“However, the negotiations will be marked by back-and-forth, friction, and threats of termination by the U.S. all with the intention of obtaining the best advantages and largely to impose its demands,” Coutino said.Â
(Other stories from the Reuters global economic poll)
(Reporting and polling by Gabriel Burin in Buenos Aires; additional polling in Mexico City by Noe Torres; Editing by Jonathan Cable, Ross Finley and Tomasz Janowski)
