MEXICO CITY, (Reuters) - Mexico's finance ministry on Thursday kept its 2026 economic growth forecast unchanged, maintaining a relatively upbeat stance even after preliminary data showed the economy contracted slightly in the first quarter.
In its first-quarter public finance report, the ministry held its annual GDP growth outlook at 1.8% to 2.8%, despite figures released earlier in the day showing the economy likely shrank 0.8% in the quarter, a steeper drop than expected.
The ministry also raised its year-end inflation forecast to 3.7% from the 3.0% estimate in the 2026 budget, signaling that price pressures are likely to remain above the central bank's official 3% target for longer than previously anticipated.
Mexico's annual inflation rate eased in the first half of April, but still stood at 4.53%.
Finance Minister Edgar Amador said inflation expectations remained anchored, noting that "in Mexico, 12-month and longer-term inflation expectations remain contained."
The government's decision to stand by its growth outlook comes as Mexico faces slowing domestic momentum and a more uncertain external environment.
Amador said changes in global trade policy had hit manufacturing industries most exposed to indirect disruptions along supply chains, while also affecting consumer and business sentiment.
"Those changes have generated a greater degree of uncertainty that has affected both consumption and investment decisions," he said.
The finance ministry forecast the average price of Mexico's export crude basket at $77.3 per barrel, holding a forecast made earlier this month which surpassed the $54.9 price assumed in the budget. Even so, it projected budget revenues this year would fall short of earlier expectations by 59 billion pesos, largely because of weaker oil income.
Amador said oil revenues lost momentum in the first quarter due to the peso's appreciation and lower output, though some of that weakness could be offset in coming months by higher export crude prices.
Despite the softer start to the year, the ministry maintained its fiscal deficit target at 4.1% of GDP and said public debt stood at 50.4% of GDP in the first quarter.
Reporting by Kylie Madry, Adriana Barrera and Ana Isabel Martinez
Source: Reuters