The Swiss Bank UBS reduced the prognosis for the Mexican economy in 2025 on Thursday, from a previous estimate of 1%, due to the uncertainty derived from the threat of tariffs by the United States and the slowdown in the investment.
In its most recent report, the Swiss Financial Services firm said that the Mexican economy faces possible stagnation, which also opens the door to more aggressive cuts in interest rates on the part of Banco de México (Banxico).
The UBS analysis indicated that the tariff threats of President Donald Trump have affected the trust of investors, which, together with a lower dynamism in the US economy, slows economic activity in Mexico and points to a recession.
“The impact on local economic activity has already felt: Trump’s intermittent tariffs are affecting investors’ confidence, which could leave Mexico to the edge of the recession already Banxico with the greatest margin to cut interest rates. Even without tariffs, we are reducing our GDP growth rate of 1% before 0%, ”the document explained.
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Effective Mexico’s strategy against tariffs
The UBS report also stressed that the Government of Claudia Sheinbaum has adopted an effective containment strategy in the Tariff dispute with the US.
Unlike Canada and the European Union, which have responded with immediate reprisals to US measures, Mexico has opted for a more cautious position.
The administration of Sheinbaum seeks to avoid a commercial escalation and has made it clear that any retaliation would be selective, focused on sectors that could politically press Trump in the US, such as grains, pork and alcoholic beverages.
“The Sheinbaum administration is managing the situation effectively and that tariffs, of imposing themselves, would probably be shortly due to the economic and financial impact in the US,” reads the report.
In addition, UBS points out that approximately 90% of Mexican exports could benefit from the benefits of the treaty between Mexico, the United States and Canada (TMEC), which could partially mitigate the impact of tariffs.
However, he warned that if the US imposes a generalized 25%tariff, Mexico could face a significant economic cost.
Impact on markets and monetary policy
Also, UBS waited for greater pressure on the Mexican weight as Banxico cuts interest rates and the economy slows down.
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The bank projects that the exchange rate could exceed 21 pesos per dollar at the end of 2025.
Regarding monetary policy, UBS has adjusted its estimate of the Banxico Terminal Interest rate to 7.5% from 8% previous, in response to economic weakness and controlled inflation.
According to their analysts, if the tariffs materialize and Mexico enters a deeper recession, the Central Bank could further cut the rate, even below 7%.
In this context, the evolution of the US trade policy will be key to determining the direction of the Mexican economy in the coming months, while, until now the Mexican government has achieved an additional month of pause for possible US tariff rates.
With EFE information
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