The OECD projects “Mexican economy growth 2025” at only 0.4%, the lowest in Latin America, as U.S. tariffs and weak domestic momentum weigh on prospects.
The Organization for Economic Cooperation and Development (OECD) warns that Mexico will register a scant 0.4% expansion of its Gross Domestic Product (GDP) in 2025, marking the weakest performance among Latin American countries and the second-lowest growth rate across all OECD members. This projection reflects a combination of external pressures—chief among them, lingering U.S. tariffs—and subdued domestic dynamics that limit investment and trade activity.
In its mid‐year Economic Outlook, released on June 3, 2025, the OECD highlighted that global growth is expected to slow from 3.3% in 2024 to 2.9% in both 2025 and 2026. Deceleration is most pronounced in major economies such as the United States, Canada, Mexico, and China. The OECD notes that higher trade barriers, tighter financial conditions, and elevated uncertainty are dampening business and consumer confidence worldwide.
For Mexico in particular, its largest trading partner—the U.S.—is forecast to slow growth materially. In its press release, the OECD explicitly warned that weakness in the U.S. economy would spill over to Mexico, as reduced demand for exports combines with lingering 25% tariffs on non‐USMCA products to constrain export performance.
Among Latin American economies, Mexico’s 0.4% growth forecast stands out as the poorest. By comparison, Colombia is expected to expand by roughly 1.7%, and Brazil by around 2%. The OECD attributes Mexico’s lag to multiple factors: elevated trade barriers imposed by the U.S., sluggish domestic investment, and limited public spending on infrastructure. Notably, the 0.4% forecast also trails behind other OECD members such as Chile (1.2%) and Poland (1.5%).
A recurring theme across recent analyses is the impact of tariffs initiated under the Trump administration. Although some USMCA‐compliant goods are exempt, tariffs remain in place on key Mexican exports such as certain agricultural and automotive components. According to the OECD, these tariffs have contributed to a 6% decline in non‐oil exports through the first quarter of 2025.
The OECD’s latest report underscores that unless U.S. trade policy shifts, Mexican exporters will continue to face higher costs and diminished access to the world’s largest consumer market. Certain manufacturers have already relocated operations to other countries like Vietnam and Thailand to avoid tariffs, further eroding Mexico’s export base.
Beyond external pressures, domestic factors are also restraining growth. Private investment in machinery and equipment is expected to rise by just 1.2% in 2025, compared to an average of 3.5% over the 2018–2021 period. Limited public investment—especially in infrastructure projects—is likewise dragging on construction output. State budgets remain tight as revenue from oil production continues to dwindle, leaving little fiscal room to stimulate growth.
Analysts at El Financiero note that government capital expenditure represents only 2.1% of GDP, the lowest among G20 members, and warn that this underinvestment in roads, ports, and telecommunications is undermining Mexico’s capacity to attract foreign direct investment.
Despite these headwinds, private consumption is expected to provide a modest buffer. Low unemployment—hovering around 3.7%—and easing inflation, projected to fall from 4.8% in 2024 to 4.2% in 2025, are anticipated to underpin household spending. The OECD notes that declining food and energy prices, combined with robust remittance inflows (up 8.5% year-on-year), should support consumer purchasing power.
However, weak wage growth—anticipated at just 0.9% in 2025—could erode real incomes. Consumer sentiment indicators have already dipped to their lowest level since 2017, reflecting caution ahead of federal elections in mid-2026.
Looking ahead, the OECD raises its growth projection for Mexico to 1.1% in 2026, conditional on an easing of tariffs and a modest pickup in public infrastructure spending. If trade barriers remain elevated, growth may struggle to reach even 1.0%, according to Bloomberg Línea.
ECLAC (the UN’s Economic Commission for Latin America and the Caribbean) similarly revised its 2025 forecast downward in April, projecting only 1.0% combined growth for Central America and Mexico, compared with 1.7% in its January outlook. This alignment across multilateral agencies underscores growing concern over Mexico’s medium-term prospects.
The Mexican Finance Ministry (SHCP) responded to the OECD’s projections by emphasizing ongoing reforms aimed at boosting productivity, particularly in the energy and digital sectors. In a statement, the SHCP highlighted the recently approved electricity market amendments, which aim to attract $20 billion in private investment over the next four years.
Meanwhile, the Confederation of Industrial Chambers of the United Mexican States (CONCAMIN) urged the government to negotiate a swift resolution to remaining tariff disputes with the U.S. and to accelerate public-private partnerships (PPPs) for infrastructure development.
Several major banks—such as BBVA México and Citibanamex—have already revised their own GDP forecasts to 0.5% for 2025, slightly more optimistic than the OECD but still signaling a broad consensus on sluggish expansion.
For multinational firms, the outlook suggests caution. Companies in the automotive sector have announced plans to delay new plant openings until 2026, betting on an eventual easing of tariffs and stronger U.S. demand. Retailers may face slower sales growth in northern border states, as cross-border shopping dampens owing to price differentials.
On the positive side, the tech sector continues to attract investment. Startups in fintech and software services secured over $1.2 billion in venture funding during Q1 2025—up 15% from the same period in 2024—indicating that digitalization trends remain resilient despite macroeconomic headwinds.
