Mexico is one of the most vulnerable countries to US import tariffs and, at best, the economy will just about eke out positive growth this year. More sweeping tariffs than we have embedded in our forecasts could easily tip the economy into recession. The rest of the region is less exposed to tariffs, but tight policy and worsening terms of trade will weigh on growth – which we expect to undershoot expectations over the next couple of years. Despite weak growth, inflation will remain uncomfortably high and our interest rate forecasts are generally on the hawkish side.
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