Mexico's economy has proved resilient, despite being affected by policy uncertainty and trade tensions, thanks to strong macroeconomic fundamentals. Policy should now focus on ensuring fiscal sustainability and accelerating growth through reforms that boost productivity and reduce informality, according to a new OECD report.
The latest OECD Economic Survey of Mexico says that GDP is projected to expand by 1.4% in 2026 and 1.7% in 2027, up from 0.7% in 2025. Inflation is projected to fall to 3.6% in 2026 and 3.2% in 2027, close to the midpoint of the central bank's target range at 3%.
"Mexico has as a strong track record of ensuring sound public finances. The ongoing fiscal consolidation should be continued and spending efficiency strengthened to safeguard fiscal space for key investments in education and digitalisation" OECD Secretary-General Mathias Cormann said, presenting the report in Mexico City with Finance Minister Edgar Amador. "Ambitious reforms are also needed to lay the foundations for stronger and more resilient long-term growth, including pro-competition reforms in the telecommunication sector to accelerate digitalisation, and improvements to the education system to support skills development and boost formal labour market opportunities."
Mexico needs steady and gradual fiscal consolidation to ensure sustainability and rebuild fiscal buffers following an exceptionally high deficit in 2024, relying on better targeted spending and optimised revenues. A more strategic approach to expenditure planning and prioritisation would include a stronger medium-term fiscal framework, and more systematic use of spending reviews and cost-benefit analysis.
The digital transformation has the potential to stimulate the investment and productivity that is needed to boost growth. To realise that potential, Mexico needs to ensure strong pro-competitive regulations in the telecommunications sector, guarantee the regulator's independence and advance digital government to expand coverage, foster innovation and improve service delivery.
Labour informality remains high, with just over half of employment outside the formal sector. Reducing informality requires building skills, given the strong link between low education and informal work. Ensuring that more students complete at least secondary education and improving the quality of education would help. Strengthening the link between education and labour market needs would ease skills gaps and expand access to higher-productivity, formal employment. Expanding childcare and eldercare provision would allow many women to access formal job opportunities and stay in the labour force.
Mexico is highly vulnerable to climate change. A comprehensive national adaptation plan would strengthen preparedness, while better information on water availability and usage would help ensure reliable and sustainable access for households and firms. A substantial increase in private investment, supported by regulations that provide clarity, stability, and long-term confidence, would help Mexico achieve its target of 38.5% of electricity supply through clean sources by 2030. Modernising and expanding the electricity network would help meet rising demand.
