An employee works in a manufacturing plant) in Ciudad Juarez, Mexico, in March. Mexico closed 2025 with weak economic growth and is heading into 2026 with limited expansion prospects. File Photo by Luis Torres/.EPA

Jan. 2 (UPI) — Mexico closed 2025 with weak economic growth and is heading into 2026 with limited expansion prospects, keeping the country among the least dynamic economies in Latin America, according to local projections and estimates from United Nations agencies.

Mexico’s central bank, Banco de México, cut its gross domestic product growth forecast for the end of 2025 by half, to 0.3% from 0.6% estimated in August.

With that outcome, Mexico’s economy will post two consecutive years of growth below the average for Latin America and the Caribbean, according to estimates from the Economic Commission for Latin America and the Caribbean.

According to the Survey of Private Sector Economists’ Expectations published in October, analysts consulted by Banco de México lowered their 2025 GDP growth estimate to 0.5%.

The revision followed official data confirming that Mexico’s economy contracted 0.3% quarter on quarter and 0.2% year on year between July and September, reflecting a sharper slowdown in economic activity during the second half of the year.

For 2026, the private sector expects growth of 1.32%, a moderate improvement that falls short of reversing a prolonged period of low dynamism.

On average, Mexico’s economy would grow 1.85% annually over the next decade, based on estimates from 42 domestic and foreign economic analysis and consulting groups.

That performance fits into a trajectory of historically constrained growth. Between 1980 and 2022, Mexico’s economy expanded by just over 2% per year on average, a pace that limited its convergence with high income economies, according to World Bank data.

Regional projections reinforce that assessment.

The economic commission estimated that Mexico would grow just 0.4% in 2025 and projects an expansion of 1.3% in 2026, placing it among the slowest growing countries in Latin America.

According to the regional body, weak economic performance reflects softer domestic demand, linked to lower remittance inflows, a decline in private consumption and reduced investment.

The commission also warned that Mexico’s economy remains vulnerable to external shocks stemming from U.S. trade, financial and migration policies.

In regional comparison, Mexico ranks near the bottom of the projected growth table for 2026, far behind economies such as Guyana, Paraguay and Costa Rica, and only above countries such as Trinidad and Tobago, Bolivia and Cuba.

Despite weak momentum, inflation expectations remained relatively stable in 2025. Analysts estimated headline inflation closed the year around 3.8%, within the central bank’s target range.

Slower growth was also reflected in the labor market.

In 2025, Mexico’s economy generated about 257,000 formal jobs registered with the Mexican Social Security Institute, a figure considered modest for one of the region’s largest economies.

The investment climate remained fragile. Nearly six in ten economists assessed that conditions were not conducive to investment, while a large majority said the economy was not in better shape than a year earlier.