Daily: Mexico Economic 08.12.2025

THE BOTTOM LINE IN 1 MINUTE:

How Today's Updates Affect You

Private sector GDP forecasts dropped to 0.4% for 2025 amid a third-quarter contraction, while the US rating agency Fitch upgraded Mexico's 2026 outlook to 1.3%—both figures remain far below government projections. The Maya Train's debt quadrupled to MX$2.47 billion by September, revealing structural deficits where operating expenses exceed revenues by 10x, pattern mirroring state oil company PEMEX and Federal Electricity Commission (CFE).

The Finance Ministry (SHCP) authorized Multiva-CIBanco merger signaling banking consolidation, while consumer confidence fell 1.6 points to 44.2 as households reassess economic prospects. The widening gap between official growth targets and private forecasts creates planning uncertainty; infrastructure megaproject subsidies pressure fiscal discipline; and banking mergers suggest institutions positioning for slower growth environment through 2026.

FEATURED STORY

Private Sector Cuts Mexico GDP Forecast to 0.4% for 2025—Third-Quarter Contraction Forces Sixth Consecutive Downgrade, Diverges Sharply From Official 1.5% Target

Details | Citi's latest survey of 32 private analysts shows Mexico's 2025 GDP growth forecast revised down to 0.4% from 0.5%, marking the sixth consecutive fortnight of downgrades following the third-quarter contraction confirmed by the National Statistics Institute (INEGI). The projection for 2026 also declined to 1.3% from previous estimates. These figures contrast starkly with the federal government's 1.5% growth target for 2025 and approach Mexico's Central Bank (Banxico) median forecast of 0.3%. Separately, Fitch Ratings maintained its 2025 projection at 0.4% but upgraded 2026 to 1.3% from 1.2%, citing increased U.S. exports and a more positive outlook for the United States. The consensus among survey participants expects Banxico to cut its benchmark interest rate by 25 basis points in December 2025, bringing it to 7% from the current 7.25%.

Analysis | The third-quarter GDP contraction of 0.3% revealed weakness concentrated in secondary activities (manufacturing, construction, mining, energy) which fell 2.9%, while services dropped 0.9% and only agriculture's 3% growth provided offset. Six fortnights without stabilization in growth forecasts indicates analysts are continually reassessing downside risks rather than seeing bottoming-out signals. The widening spread between government projections (1.5%) and private consensus (0.4%) creates credibility challenges for fiscal planning—the 2026 federal budget assumes growth will accelerate to 2-3%, but if 2025 closes near 0.4% and 2026 achieves only 1.3%, revenue targets become unrealistic.

Mexico's IEPS (Special Tax on Production and Services) increase scheduled for 2026 plus the December 13% minimum wage hike could create "transitory obstacles" to inflation reduction, potentially limiting how quickly Banxico can ease monetary policy. Capital allocation strategies should assume subdued domestic demand through 2026, with nearshoring opportunities providing the primary growth channel rather than consumer spending. Reporting should highlight this credibility gap when assessing policy effectiveness and fiscal sustainability—Sheinbaum administration's Plan Mexico economic strategy could face skepticism if macro fundamentals remain weak.

MONETARY & FISCAL POLICY

Consumer Confidence Falls 1.6 Points to 44.2 in November—Breaking Three-Month Winning Streak as Households Reassess Economic Outlook

Details | The National Statistics Institute (INEGI) reported on December 5 that Mexico's Consumer Confidence Indicator (ICC) declined to 44.2 points in November from 45.8 in October, a 1.6-point drop that ends three consecutive months of advances. The index measures household perceptions of current economic conditions and future expectations on a 0-100 scale, with scores below 50 indicating pessimism. The November reading reflects consumer reassessment following third-quarter GDP contraction and persistent inflation above Banxico's 3% target.

Analysis | The combination of falling confidence and stagnant consumption creates downward pressure on fourth-quarter growth, making Banxico's December rate-cut decision more complex: cutting rates supports demand but risks entrenching inflation expectations if consumers interpret easing as validating price pressures. For central bank watchers: falling consumer confidence typically precedes demand-driven disinflation, which supports Banxico's easing cycle. However, the confidence drop occurred alongside accelerating inflation, suggesting supply-side pressures dominate and limiting how aggressively Banxico can cut without risking credibility. For economic forecasters: consumer confidence at 44.2 points has historically correlated with GDP growth below 1%, reinforcing private sector projections of 0.4% for 2025 and suggesting Q4 won't deliver the rebound needed to reach government's 1.5% target.

INFRASTRUCTURE & ENERGY

Mayan Train Debt Quadruples to MX$2.47B by September—298% Increase Since January Reveals Structural Deficit as Operating Costs Exceed Revenues

Details | The Mayan Train accumulated MX$2.47 billion in debts to suppliers and employees by September 2025, a 298% increase from MX$620 million registered in January, according to the Analytical Statement of Debt and Other Liabilities accessed by El Universal. The project, administered by the Defense Ministry since its December 2023 inauguration, has required continuous government subsidies as expenses systematically exceed revenues. First-year operations (December 2023-June 2025) transported 1.3 million passengers against an initial target of 3 million annually. Government officials celebrated surpassing the revised 2025 target of 1.2 million users, though the project's financial sustainability remains unproven.

Analysis | The Mayan Train's financial trajectory mirrors the state oil company PEMEX and the Federal Electricity Commission (CFE): structural deficits where operating philosophy prioritizes political objectives over economic viability. First-semester 2025 data showed revenues of MX$731 million against operating expenses of MX$7.6 billion—meaning ticket sales covered only 9.6% of costs, requiring federal subsidies of MX$1.33 billion just to reach a MX$2 billion loss. Additionally, The Environment Minister classified the environmental impact information as national security until 2028, preventing public scrutiny of ecosystem damage costs. This governance model could expand to other infrastructure projects, reducing private sector visibility into project viability and partnership opportunities. Finally, hotel occupancy and tourism business development plans should not assume the Train will deliver the visitor volumes originally promised.

CORPORATE & MARKETS

Finance Ministry Authorizes Multiva-CIBanco Merger—Banking Consolidation Signals Institutions Positioning for Slower Growth Environment

Details | The Finance Ministry (SHCP) authorized the merger of Multiva and CIBanco's fiduciary business on December 6, according to the announcement published in Mexico's Official Gazette (DOF). The National Banking and Securities Commission (CNBV) requested authorization on behalf of the merging entities, with Banco Multiva, S.A. surviving as the merging company and CIBanco, S.A. extinguishing as the merged entity. The decision strengthens the new group's position in Mexico's competitive financial market and reflects ongoing consolidation trends as institutions seek cost reductions and improved service offerings.

Analysis | The merger follows broader banking sector acknowledgment that Mexico's 2025-2026 environment requires defensive positioning. Mexican Banking Association (ABM) President Emilio Romano stated in late November that banks faced "more regulatory changes in 2025 than desired" including limits on tax deductions for payments to the Bank Savings Protection Institute (IPAB). The Multiva-CIBanco combination focuses on fiduciary services rather than retail banking, suggesting institutions are consolidating fee-generating businesses that require less capital while positioning for subdued loan growth. Romano's emphasis on "stability and certainty" in regulations reflects banker concerns that judicial reforms and the elimination of autonomous regulatory bodies create and unpredictable operating environments—mergers allow institutions to spread compliance costs across larger asset bases.

Moreover, the merger approval coincides with ABM president Romano expressing confidence in the new Attorney General Ernestina Godoy strengthening Rule of Law, suggesting the Banking Sector is accepting the Sheinbaum administration's governance changes in exchange for operational predictability and support for industry consolidation.

Trade & Commerce

Agricultural Producers Lift Highway Blockades After Strategic Recess—Frente Nacional Maintains Dialogue With CONAGUA on Water Law Objections

Details | Agricultural producers lifted highway blockades on December 5 following protests against the General Water Law approved by Congress and sent to the Executive Branch. The National Front for the Rescue of Mexican Agriculture (Frente Nacional para el Rescate del Campo Mexicano, FNRCM) issued a statement describing the action as a "strategic recess" to regroup and continue fighting decisions considered harmful. The group emphasized ongoing dialogue with the National Water Commission (CONAGUA), directed by Efraín Morales López, though dissatisfaction with the law remains. The blockades had affected dozens of federal routes and customs facilities including Ciudad Juárez and Nogales before their suspension

Analysis | The "strategic recess" language indicates calculated de-escalation rather than resolution—farmers maintain their fundamental objections to water concession transfer restrictions and guaranteed corn price demands but recognize prolonged blockades risk losing public support and provoking government crackdown. The dialogue continuation with CONAGUA likely focuses on implementation regulations for the water law, where administrative procedures for concession audits, usage verification timelines, and transfer restriction exceptions could be negotiated within the law's framework without reopening congressional debate.

Companies dependent on northern border crossings (Ciudad Juárez, Nogales) should maintain contingency routing plans and elevated inventory buffers through USMCA review completion in July 2026. For agricultural commodity traders: farmers' inability to secure higher guaranteed corn prices despite blockade pressure suggests government will prioritize fiscal discipline over agricultural subsidies. For water-intensive industrial users: FNRCM's continued dialogue with CONAGUA on water law implementation creates a 3-6 month window where administrative regulations will be shaped. Companies with expansion plans requiring water concessions should monitor these negotiations and engage with CONAGUA on implementation frameworks that balance agricultural and industrial needs.

For political analysts: the blockade suspension demonstrates the Sheinbaum administration's ability to reduce protest intensity through dialogue without major concessions, following the same playbook used for transportation sector strikes. This suggests the government will continue offering negotiation forums that buy time while implementing controversial policies largely unchanged.

QUICK HITS:

3 More Updates Worth Tracking

1/ The Lower House confirmed Vives Flores as head of the Public Credit and International Affairs Unit at the Finance Ministry with 329 votes in favor, 84 against, and zero abstentions; the unit proposes credit policy coordination with the Ministry's Economic Planning Unit.

2/ Economy Ministry Launches MX$300M Innovation Fund for Plan México—Targets Semiconductors, Electromobility, Biotech, and Advanced Manufacturing Through the administration of Mexico's National Development Bank (NAFIN)

3/ Lower House Installs Working Group on Alcoholic Beverage Taxation coordinated by PT deputy Francisco Javier Guízar Macías. The group will evaluate taxation challenges for alcoholic beverages with the goal of avoiding negative economic impacts while exploring fiscal alternatives.