Bank of Mexico slashes 2025 economic growth forecast to 0.3% – Mexico News Daily

Mexico’s Economic Outlook: A Sustainable Development Goals Perspective

Revised 2025 GDP Growth Forecast and Implications for SDG 8

The Bank of Mexico (Banxico) has revised its 2025 GDP growth forecast downward from 0.6% to a midpoint of 0.3%, with a projected range between 0.1% and 0.5%. This adjustment, detailed in the central bank’s third-quarter report, stems from a 0.3% economic contraction during the July-September period. This slowdown presents a significant challenge to Mexico’s progress toward Sustainable Development Goal 8 (SDG 8): Decent Work and Economic Growth, which calls for sustained, inclusive, and sustainable economic expansion.

• Previous Forecast: 0.6% for 2025.
• Current Forecast: 0.3% for 2025.
• Primary Cause: A greater-than-anticipated economic weakness in the third quarter of 2025.
• Annual Comparison: The 0.4% GDP expansion in the first nine months of 2025 marks the weakest performance for this period since the 2020 pandemic-induced contraction.

Sectoral Performance and Linkages to SDG 9

The economic underperformance is largely attributed to a deterioration of the secondary sector, which contracted by 1.5% in the first nine months of the year. This trend directly impacts Sustainable Development Goal 9 (SDG 9): Industry, Innovation, and Infrastructure, as a decline in industrial activity can hinder efforts to promote inclusive and sustainable industrialization. In contrast, the primary and tertiary sectors showed resilience.

• Secondary Sector (Industry/Manufacturing): -1.5% contraction.
• Primary Sector (Agriculture): +2.9% growth.
• Tertiary Sector (Services): +1.2% expansion.

Future Projections and Trade Policy Considerations

Medium-Term Growth Outlook (2026-2027) and SDG 17

Banxico maintains a more optimistic outlook for the medium term, forecasting a rebound to 1.1% growth in 2026 and 2.0% in 2027. These projections are contingent on the stability of international trade relationships, particularly the United States-Mexico-Canada Agreement (USMCA). The upcoming 2026 review of the USMCA underscores the importance of Sustainable Development Goal 17 (SDG 17): Partnerships for the Goals, as robust global partnerships are essential for ensuring the economic certainty needed to attract foreign direct investment and stimulate growth.

Risks to Sustainable Growth

The report identifies several risks that could impede progress toward sustainable economic growth. These factors threaten the stability required to achieve long-term development objectives.

• Intensification of uncertainty related to U.S. trade policy.
• Lower-than-expected growth in the U.S. economy, a key trading partner.

Key Economic Indicators and Progress on Sustainable Development

Inflation Forecasts

The central bank anticipates that annual headline inflation will close 2025 at 3.5%. It projects a moderation to 3.0% by the third quarter of 2026, aligning with its target. Price stability is a crucial macroeconomic foundation for achieving sustainable and equitable growth as outlined in SDG 8.

Employment Projections and Challenges for SDG 8

Banxico’s forecasts for formal sector job creation indicate a positive trend, which is central to achieving SDG 8‘s target of full and productive employment. However, the persistence of a large informal sector remains a major obstacle to providing decent work for all and reducing inequality, a key aspect of Sustainable Development Goal 10 (SDG 10).

• 2025 Forecast: 210,000 to 310,000 new formal jobs.
• 2026 Forecast: 260,000 to 460,000 new formal jobs.
• 2027 Forecast: 400,000 to 600,000 new formal jobs.
• Labor Market Reality (Q3 2025): While the unemployment rate was 2.9%, the informal sector accounted for 55.4% of all employed individuals, highlighting a significant deficit in decent work conditions.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

1. SDG 8: Decent Work and Economic Growth
   • The entire article revolves around Mexico’s economic performance, including GDP growth forecasts, contractions, and sector-specific performance (primary, secondary, tertiary). It discusses factors affecting the economy, such as trade tensions and investment. Furthermore, it explicitly addresses job creation, unemployment rates, and the prevalence of the informal sector, which are central themes of SDG 8.
2. SDG 17: Partnerships for the Goals
   • The article highlights the importance of international trade and partnerships, specifically mentioning the USMCA (United States-Mexico-Canada Agreement). It discusses export revenues, trade tensions, tariffs imposed by the United States, and the role of Foreign Direct Investment (FDI) in Mexico’s economic outlook. These elements are directly related to fostering global partnerships for sustainable development.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Under SDG 8: Decent Work and Economic Growth
   • Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 per cent gross domestic product growth per annum in the least developed countries.
     • The article is centered on this target, providing specific figures for Mexico’s GDP growth. It details the revised forecast for 2025 (0.3%), the contraction in the third quarter (-0.3%), the annual decline (-0.2%), and future projections for 2026 (1.1%) and 2027 (2%).
   • Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.
     • This target is addressed through the discussion on job creation and unemployment. The article provides Banxico’s forecasts for formal sector job growth (“between 210,000 and 310,000 additional positions will have been added in 2025”) and mentions the national unemployment rate (“2.9% in the third quarter of 2025”). It also touches upon the “decent work” aspect by highlighting the large informal sector (“55.4% of all people with jobs… were employed in the country’s vast informal sector”).
2. Under SDG 17: Partnerships for the Goals
   • Target 17.10: Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system under the World Trade Organization, including through the conclusion of negotiations under its Doha Development Agenda.
     • The article’s focus on the USMCA trade pact, the upcoming review in 2026, and the hope to “negotiate even better trading conditions” directly relates to this target. It also mentions challenges to an open trading system, such as when it notes that “a range of Mexican products face tariffs when entering the United States.”
   • Target 17.5: Adopt and implement investment promotion regimes for least developed countries.
     • While Mexico is not a least developed country, the principle of promoting investment is central to the article. It discusses the role of Foreign Direct Investment (FDI) as a driver for economic growth, citing that in the first nine months of 2025, “FDI in Mexico reached a record high of just over US $40.9 billion.” The article links a positive outcome of the USMCA review to a “greater influx of foreign direct investment.”

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. Indicator for Target 8.1:
   • Indicator 8.1.1: Annual growth rate of real GDP per capita. The article is replete with data points for this indicator. It explicitly states the “0.3% economic contraction,” the “0.2% annual decline,” the revised “GDP growth forecast for 2025” of 0.3%, and future forecasts of 1.1% for 2026 and 2% for 2027. These figures are direct measures of economic growth.
2. Indicators for Target 8.5:
   • Indicator 8.5.2: Unemployment rate. The article provides a precise figure for this indicator, stating, “Mexico’s unemployment rate was 2.9% in the third quarter of 2025.”
   • (Implied) Indicator 8.3.1: Proportion of informal employment in total employment. Although not cited as an official indicator, the article provides a direct measure related to the quality of employment by stating that “55.4% of all people with jobs in that period were employed in the country’s vast informal sector.” This measures the challenge in achieving “decent work for all.” The forecasts for formal sector job creation (“210,000 to 310,000 additional positions”) also serve as a measure of progress.
3. Indicators for Target 17.10 & 17.5:
   • (Implied) Indicator 17.10.1: Worldwide weighted tariff-average. The article implies this indicator by discussing trade barriers. The mention that “a range of Mexican products face tariffs when entering the United States” points directly to the existence and impact of tariffs on trade, which this indicator measures.
   • (Implied) Indicator related to Foreign Direct Investment (FDI). The article provides a specific monetary value for FDI inflows: “In the first nine months of 2025, FDI in Mexico reached a record high of just over US $40.9 billion.” This figure is a direct measure of the success of investment promotion and international economic partnerships.

4. Summary Table of SDGs, Targets, and Indicators

Source: mexiconewsdaily.com