IMF sees Mexico growth improving mildly in 2026, urges debt cuts

MEXICO CITY, Sept 19 (Reuters) - Mexico's economic growth is expected to continue slowing in 2025 before ticking up slightly next year, the International Monetary Fund said on Friday, while warning that fiscal and structural measures are needed to secure long-term economic stability.

WHY IT'S IMPORTANT

The outlook for Latin America's second-largest economy is clouded by trade tensions, infrastructure gaps, and fiscal vulnerabilities, the international lender said in a statement after a staff visit to Mexico.

The IMF noted that risks to the country's financial stability appear to be low, and that the economic outlook could improve if U.S. demand is stronger than expected, and if Mexico secures a favorable review of its trade pact with the U.S. and Canada.

BY THE NUMBERS

The IMF projects GDP to grow by 1.0% this year, from 1.4% in 2024, before ticking up to 1.5% in 2026.

Mexico's public gross debt-to-GDP ratio could rise to 61.5% by 2030 under current policies, the IMF said.

KEY QUOTES

"Mexico's record of very strong policies and policy frameworks has also proved to be an important asset as the country navigates the uncertain economic environment. Growth is expected to accelerate somewhat in 2026 although the effect of tariffs and trade uncertainty will continue to be felt."

"Further deficit reduction and policy measures are needed going forward to prevent further upward drifts in public debt and create fiscal space to respond to possible shocks," the IMF said.

CONTEXT

Mexico's government forecasts growth next year of between 1.8% and 2.8%, while its budget deficit falling slightly to 4.10% next year.

WHAT’S NEXT

The IMF recommends Mexico target a 2.5% fiscal deficit by 2027 and adopt measures to enhance fiscal credibility.