By Gabriel Burin
BUENOS AIRES, Jan 19 (Reuters) - Mexico's economy will stay on a slow track this year amid high uncertainty over the future of the country's trade deal with the United States and Canada (USMCA), a Reuters poll among economists found.
Risks to economic growth are tilted to the downside due to concerns about U.S. President Donald Trump's lack of support for the existing agreement that is set for review by a July 1 deadline, analysts said.
At the same time, Mexico's inflation outlook is
worsening as tax and tariff hikes kick in at the start of 2026, leading the central bank to tighten its forward guidance earlier this month.
Gross Domestic Product (GDP) in Latin America's No.2 economy after Brazil is set to grow just 1.3% this year and 1.9% in 2027, according to the median forecast of 29 economists polled January 12-16.
Still, that is better than the modest 0.4% growth expected in the year just ended as a result of relatively steep interest rates, fiscal consolidation and worries related to U.S. tariffs. Preliminary GDP data for 2025 are due on January 30.
"The downside bias in the balance of risks to economic growth in 2026 remains. In particular... a tougher-than-expected trade agreement negotiation," said Alejandro Saldaña, chief economist at Ve por Mas.
Of a total of 12 respondents to an additional question on risks to GDP growth forecasts, eight said they leaned toward weaker expansion, while four viewed a possible better-than-expected outcome.
Among the latter, Alberto Ramos, Goldman Sachs head of Latin America economic research, said: "The risk is probably slightly skewed to the upside in part because we have a positive view of the U.S. economy.
"If Mexico's access to the U.S. market becomes more difficult or more onerous (from the USMCA review) we will revisit our macro outlook," he added.
STRICTER RULES?
This could include stricter rules of origin that trouble automakers as well as more scrutiny on trade flows between Mexico and China to deal with fears of import triangulation from the Asian nation.
Meanwhile, headline consumer prices in Mexico are likely to rise 3.8% throughout 2026 on average 12-month terms, matching last year's average 3.8% rate, the survey showed. In 2027 inflation is seen inching down to 3.7%.
"Inflation could be higher than forecast if some of the shocks expected at the start of the year prove to be less transitory than anticipated," said Saldaña at Ve por Mas.
"Considering the challenges on the inflation horizon and that the monetary stance is currently in neutral territory, the central bank has almost no room to further adjust its monetary stance," he said, referring to rate cuts.
In reply to an extra question on inflation risks, nine participants saw chances of higher pressures than forecast, two said they may be lower, and one qualified them as "symmetrical".
"During the summer, we could see a notable price increase as a result of the FIFA World Cup in Mexico, which could drive up service prices... amid increased tourist inflows", Scotiabank analysts wrote in a report.
"Likewise, we could see some pressures from the 13% increase in the minimum wage as well as higher taxes on imported products from Asia without trade agreements with Mexico and on health-harmful products."
Mexico's central bank will likely keep its benchmark rate unchanged at 7.00% in the first quarter of 2026 and then cut it by 50 basis points the next one, leaving it at 6.50% for the foreseeable future, the poll showed.
(Other stories from the Reuters global economic poll)
(Reporting and polling by Gabriel Burin in Buenos Aires; Editing by Ross Finley and Ros Russell)
