Mexico won’t climb back above 2% annual growth until 2027, according to the Mexico IMF forecast released this month. The Fund pegs 2025 at roughly 1% and 2026 at 1.5%, and says a return to Mexico’s long-run pace will take structural fixes: better infrastructure, stronger rule of law, and more private investment. Officials in Mexico City see a brighter path, but the IMF’s reading is clear — near-term growth is capped unless reforms bite and U.S. trade turbulence eases. Here’s what’s driving the ceiling and what could lift it.

Mexico’s growth ceiling won’t lift before 2027

Mexico’s economy is expected to expand about 1% in 2025 and 1.5% in 2026, with growth not topping 2% until 2027, according to the latest IMF staff report and October World Economic Outlook. The Fund says momentum softened in mid-2024 and will stay subdued through next year as fiscal consolidation and still-restrictive monetary policy cool demand. It adds a kicker that matters for planning: activity “returns to its long-term average by 2027,” essentially the first year the projection edges above 2 percent.

Mexico IMF forecast

Under the Mexico IMF forecast, the near-term drag isn’t mystery math. Lower public outlays after 2024’s expansion, high borrowing costs even as Banxico eases, and tariff-related uncertainty are all pressing down on consumption and investment. The IMF pegs 2025 growth at 1.0% and 2026 at 1.5% in its Article IV table and flags medium-term risks if reforms stall. It also points straight at what could lift potential growth: closing infrastructure gaps, strengthening the rule of law, and clarifying trade rules under the USMCA review.

A separate October WEO update backs the track: Mexico’s line sits near 1% in 2025 before a mild 2026 pickup, with the return to two-plus percent not appearing before 2027. That sequence matches private consensus gathered in late-October polling and aligns with the Fund’s broader regional cooling.

What could change the timeline

There are realistic swing factors. Upside comes from stronger-than-expected U.S. demand, nearshoring that finally converts announcements into factories, and a faster-falling inflation path that lets Banxico normalize sooner without unanchoring expectations. The IMF also notes that fiscal clarity matters: front-loaded consolidation with credible medium-term guardrails can lower financing costs and make space for targeted public investment. On the other side of the ledger, lingering tariff noise and uneven rule-of-law enforcement keep investors cautious. If those frictions persist, Mexico risks sitting under the 2% ceiling longer than the baseline suggests.

For now, the Fund’s baseline remains conservative. Reuters’ read of the IMF’s September update captured the same slope: a downshift to ~1% in 2025, a modest 2026 improvement, and reforms urged to stabilize debt and unlock private capital. The direction hasn’t changed in the late-October Article IV package, which repeats the call to strengthen institutions and fix infrastructure bottlenecks to lift potential growth beyond the low-two range.