Uncertainty over tariffs is the reason behind a weak economy: Banxico

MEXICO CITY.— The Bank of Mexico (Banxico) warned of persistent “weakness” in the national economy due to the uncertainty generated by the tariff measures announced by the United States, which appears to confirm forecasts of an economic slowdown in 2025.

“At the regional level, economic activity is estimated to have continued to contract in the north, center, and, more sharply, in the south during the first quarter of 2025,” the central bank noted in its “ Regional Economies Report, January-March 2025.”

The report comes after confirming that Mexico's economy grew 0.2% quarterly and 0.8% year-over-year from January to March 2025, a slowdown compared to the 1.5% increase in gross domestic product (GDP) for all of 2024.

The document noted that in the first quarter of 2025 , "both secondary and tertiary activities contracted," and the low growth reported for the period, which amounted to 0.20%, was a consequence of the "expansion of primary activities."

"On the external front, uncertainty persists regarding the policies our main trading partner could implement, which, in and of itself, could be influencing the decisions of economic agents, even before these measures are implemented," he asserted.

He pointed out that this could have a particular impact on the northern states and central regions, "given their high level of integration with the international market."

The deterioration in the outlook has deepened in recent weeks, and two weeks ago the Bank of Mexico lowered its growth forecasts for the Mexican economy, the second largest in Latin America , estimating growth of just 0.1% in 2025, compared to the 0.6% forecast at the end of last year.

He also predicted that entities that have historically been migrant-sending entities and for which remittances are a "relatively important" source of income could be affected by the potential 3.5% tax proposed by the administration of U.S. President Donald Trump and currently under discussion in Congress.

Among other challenges, he noted, are public safety and extreme weather events such as droughts, floods, and frost.

"In that sense, trade under the USMCA (United States-Mexico-Canada Agreement) offers preferential treatment that represents an opportunity to strengthen North American value chains and expand the regions' participation in them," he said.

The Mexican Stock Exchange (BMV) gained 0.11%, with its main indicator, the CPI, reaching 57,829.74 points, in a session of mixed results in global markets and gains in the United States.

"The capital market closed the session with mixed results among the major global stock market indices. In the United States, gains were seen after solid demand was recorded at the 30-year Treasury bond auction," explained Gabriela Siller, Director of Economic and Financial Analysis at Banco Base.

In Mexico, the Price and Quotation Index (IPC), the main indicator of the Mexican Stock Exchange (BMV), "closed the session with a gain of 0.11%."