Bank of America cuts Mexico GDP forecast to 0.8% after 1Q contraction

Bank of America sharply cut its 2026 GDP forecast for Mexico to 0.8% (from 1.3%) after a worse-than-expected 1Q contraction, flagging stagflationary external headwinds and structural productivity issues. Mexico’s flash GDP fell 3.16% quarter‑on‑quarter (annualized) in 1Q vs. expectations of a 2.38% decline, with all major sectors contracting (agriculture -5.48%, industry -4.33%, services -2.38%). BofA now expects Banxico to move sooner on easing — a 25bp cut at the May 7 meeting to 6.50% and rates held through year-end — which, combined with weaker growth and sectoral headwinds (auto tariffs, tourism hits), suggests downside pressure on the peso and could weigh on Mexican assets and rates-sensitive sectors.