Dismal Economic Outlook for Mexico: Predictions by Alejandro Werner

Projections indicate that this year Mexico is heading toward an economic recession and that by before 2027 it could lose its investment grade, warns Alejandro Werner, former Undersecretary of Finance. Werner, who also served as the director of the Western Hemisphere department at the IMF, mentioned that it is very likely that this year we will see two or three quarters of negative economic growth.

“Whenever there’s a change in government, growth tends to drop by nearly two percentage points, and this will happen again,” he commented during his participation in the 2025 Economic Outlook Seminar at ITAM. He highlighted that this situation is exacerbated by the arrival of Donald Trump and the negotiations that will need to be established with him, particularly on issues of security and migration, as well as a judicial reform that generates uncertainty. He also expressed concern about the fiscal situation. Despite the fiscal discipline during much of Andrés Manuel López Obrador's administration, a significant and unjustified fiscal expansion was evident in the end. “Claudia (Sheinbaum) will inherit a considerable fiscal deficit and strong inertia spending pressures,” he asserted. Considering all this, Werner predicts that, in the absence of tax reform, it is likely that before 2027 or early that year, Mexico will lose its investment grade: “It wouldn't be the end of the world, but it would definitely create significant pressure in the financial realm.”

In an uncertain economic landscape, it is vital for Mexico to implement structural reforms that not only strengthen its fiscal policy but also build confidence among investors and markets. Economic stability depends on strategic decisions that allow for sustainable growth and optimal resource management, thus avoiding future crises that could impact the country's development.