Mexico will have the most modest performance in Latin America in 2025: IIF

The Mexican economy will register the most modest performance in Latin America this year, even below expectations for Venezuela, according to the team of economists from the largest association of global financial institutions, the Institute of International Finance (IIF).

According to them, Mexico's Gross Domestic Product (GDP) will grow by 0.3% this year, reflecting the deterioration of its external and internal growth drivers.

On the global front, they identified the impact of the reduced flow of productive investments due to the uncertainty generated by the new U.S. trade and immigration policies, as well as a weakening in the flow of remittances, which in previous years accelerated domestic consumption.

At the domestic level, they specified that "Mexico faces the greatest burden in the region due to structural obstacles such as the reorganization of the supply chain, limited room for maneuver to implement any stimulus; institutional problems related to judicial reform; and deficiencies in its infrastructure."

Venezuela's economy will grow by 0.6% this year, according to estimates, which will allow it to surpass the slowest economy in the region, according to the IIF's assessment. The more closed the economy, the less exposed it is to deterioration in this year of trade fragmentation, they noted.

In a first look at global performance following the escalation of tensions in the Middle East, "intensified by the US bombing of Iranian nuclear facilities," they warned that "trends point to a more fragmented global environment."

They emphasized that "the US attacks on Iranian cities on June 22 mark a significant escalation that increases fears of retaliation and adds another layer of volatility to energy markets and global risk sentiment."

They added that "the US trade and fiscal agenda has become much more interventionist."

Global slowdown, the diagnosis

IIF experts anticipate that the global economy will register 2.6% growth this year, impacted by the slowdown in the United States, the eurozone, and Japan.

For the largest economy, they anticipate a 1.2% increase, which will break the four-year streak of growth above 2 percent.

They noted that the US slowdown is due to a softening of consumer sentiment, an increase in the savings rate, and weakening business indicators.

The introduction of tariffs, along with the intensification of geopolitical tensions, has added to the negative outlook, exacerbating global uncertainty.

For the eurozone, they projected a 1% increase in GDP this year, facing a mixed outlook with Germany driving the pace with its expansionary policy, increasing defense and infrastructure spending, and the uncertainty posed by geopolitical instability.

Meanwhile, for Japan, they warn of limited fiscal space amid the gradual exit from its ultra-loose monetary policy, factors that lead to a 0.8 percent increase.

For China, the world's second-largest economy, growth is forecast at 4.7%, the lowest in the last three years.