OECD: Mexico's Economy Faces Recession Due to US Tariffs Through 2026

The Organisation for Economic Co-operation and Development (OECD) anticipates that Mexico's economy will experience a recession extending into 2026, primarily due to the impact of bilateral tariffs. Economists project a 1.3% contraction in Mexico's economy this year, followed by an additional 0.6% decline in 2026. This forecast contrasts sharply with the 1.2% growth projected in November. These expectations are based on the assumption that the United States will impose tariffs of 25% on all goods from Mexico, with Mexico retaliating in kind. The OECD's report, the Interim Economic Outlook, suggests that such trade policies will increase revenue for the imposing governments but hinder global economic activity, income, and regular tax collection. The OECD emphasizes that the impact of increased costs will be amplified as inputs cross borders multiple times, incurring tariffs at each stage, particularly within the integrated North American market.