Mexico's economy found its footing in the spring. It came with a small asterisk: the 1.4% reading fell short of the 1.5% preliminary estimate, a sign the recovery was real but not as strong as first hoped.
The modest expansion comes amid a complex global environment, with U.S. trade policy uncertainties and the upcoming USMCA review casting a shadow over investment decisions. Still, exports have been a bright spot, with June shipments up more than a third year over year and a monthly trade surplus of $4.09 billion.
The engines of growth are easy to spot. Construction jumped 4.8% in the second quarter, bouncing back from a 0.7% drop. Services increased 2.3% after a 0.9% gain. The 19-month slide in gross fixed investment stopped in April, helped by government spending.
Still, the gains are not spreading as far as they could. Gabriela Siller, Banco Base's head of economic analysis, points to deeper problems: "This stagnation is driven by the weakening of institutions, an increase in informal employment, a decline in productivity and lower gross fixed investment."
Prices are picking up, but slowly. Remove food and fuel from the numbers, and the picture is calmer. The latest headline reading sits above Banxico's 3% midpoint but below the top of the target range. Core inflation also remains within the bank's accepted tolerance band, which runs one percentage point on either side of 3%.
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Officials consider the existing rate level appropriate. They said, "Most of the five board members see no clear demand-driven inflation, and no immediate policy move is expected." That is the view Siller says will hold through the rest of the year.
"The service sector continues to put sent pressure on inflation," she said. "The central bank will keep the interest rate unchanged for the rest of the year."
That matters because inflation is still above the 3% target, but the target includes a one-percentage-point cushion on each side. Since the latest figure is still within the tolerance band, the central bank sees no pressing need for adjustment.
Siller expects the economy to expand only 1% this year, while Banxico forecasts 1.1% growth with risks tilted to the downside. In the latest Citi survey, analysts kept their 2026 outlook at 1.2% and trimmed their year-end inflation forecast to 4% from 4.02%.
Exports are one bright spot. June shipments were up more than a third from a year earlier, and the monthly trade surplus reached $4.09 billion. Alberto Ramos, chief Latin America economist at Goldman Sachs, says lower minimum wages and public works could support local demand, although the U.S. trade policy noise and the USMCA review continue to cloud the investment outlook.
For long-term investors, the picture is steady but not strong. Your money is still growing, inflation is not runaway, and the central bank is comfortable staying patient. That combination tends to reward patience over panic, even when improvement arrives in smaller steps than anyone would like.
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