Mexico GDP forecast slashed, Banxico seen cutting rates aggressively in 2025 - Citi

• Citi's April survey shows sharp downgrade in growth outlook: 2025 GDP seen at 0.3%, down from 0.6%.
• Majority of analysts forecast Banxico will cut rates to 8.5% in May; 2025 year-end rate seen at 8%.

On April 7, Citi revealed its latest Mexico Expectations Survey, in which private economists projected that the economy would grow 0.3% in 2025, less than the 0.6% expected in the last survey. For 2026, GDP is expected to decrease from 1.7% to 1.5%.

Banxico to lower rates to 8% in 2025 and to 7% in 2026

For the upcoming Banco de Mexico (Banxico) meeting in May, 29 analysts estimate the central bank will lower rates 50 basis points (bps) to 8.50%. Three participants project a 25-bps rate cut. For the rest of the year, the median expected Mexico's interest rates to end at 8%, and for 2026, the median forecasts rates at 7%.

The USD/MXN exchange rate for year-end in 2025 is 20.90, and for 2026 it is projected to rise to 21.30, 20 cents lower than the previous survey.

March headline inflation is projected to end at 3.8% YoY higher than February's 3.77% rate. Core figures are projected to end at 3.64% YoY lower than the previous month of 3.65%.

Inflation expectations remained stable in 2025, with headline figures expected at 3.80% for the full year and an increase from 3.66% to 3.7% by the year's end. For 2026, inflation is expected to remain at 3.78%, unchanged from the previous survey.