Bank of Mexico edges up 2026 economic growth forecast but flags risks

MEXICO CITY, Feb 26 (Reuters) - The Bank of Mexico on Thursday edged up its growth forecast for Mexico's economy this year, but flagged continued risks from global trade tensions ahead of this year's revision of Mexico's trade deal with the U.S. and Canada.

In the central bank's report for the fourth quarter of 2025, published Thursday, the bank slightly raised its forecast for this year's gross domestic product growth to 1.6%, from a previous estimate of 1.1% in its report published in November.

While Mexico's economy is expected to see moderate improvement in 2026 after a weak 2025, Banxico said, the country continues to face a "complex global environment," with global trade tensions and geopolitical conflicts posing risks.

Banxico, as the central bank is known, flagged the joint review of the United States-Mexico-Canada trade deal, scheduled for July, as a risk to growth.

"Private consumption is estimated to trend upwards, while investment is anticipated to remain weak at least until the second half of 2026, given the uncertainty regarding the trade relationship with the United States and the upcoming review of the USMCA," Banxico said.

Despite the related uncertainty, the central bank said "a deeper economic integration in the North American region continues to offer potential shared gains for its member countries."

The bank also raised its projections for average annual inflation for the fourth quarter of 2026 to 3.5%, up from the forecast of 3.0% made in the bank's previous November report.

The bank also lifted its forecast for average annual core inflation for that period to 3.4%, up from the 3.0% estimated in November.

The revised forecasts were previously announced in Banxico's latest monetary policy decision on February 5.