Mexico City’s IMEF stuck to its 1.3 percent GDP growth estimate for 2026 in its February survey. The projection assumes the USMCA free trade pact gets renewed on schedule, according to Victor Herrera, the group’s director of economic studies.

Herrera laid out the outlook during a presentation on February 17. He stressed that current conditions rely on the treaty’s extension. The US, Mexico and Canada face a joint review on July 1—exactly six years after USMCA took effect. Negotiators could push the deal through 2036, followed by another check in 2032.

Formal discussions kicked off in September 2025. Some progress has occurred. Yet 132 days out, major sticking points linger. Herrera called recent threats from US President Donald Trump to ditch the treaty a likely bargaining ploy. Still, he flagged rising worries that Washington might stall past the deadline, ushering in deep uncertainty.

“Once we get past 1 July, the forecasts change,” Herrera said after the event. “Economic conditions will gradually worsen for every month no resolution is reached.” He added that investment won’t ramp up without a firm renewal.

USMCA rules set the next official renewal shot for July 2027 if talks falter. An informal pact might surface sooner. Either way, drawn-out doubts would batter the peso. That would hike costs for state oil giant Pemex’s heavy foreign debt load and strain government budgets.

The peso has shown real muscle lately. It climbed 16 percent against the dollar in 2025. This year brought another 5 percent gain, hitting 17.16 pesos per dollar on February 18. IMEF now sees it ending 2026 at 18.5 pesos per dollar—tighter than the prior 19 pesos call from December.

Inflation projections ticked up too. IMEF lifted its 2026 estimate to 4 percent from 3.95 percent. The tweak tracks January’s headline inflation jump to 3.79 percent from December’s 3.69 percent. Core inflation sped to 4.52 percent.

Mexico’s central bank paused rate cuts on February 5. It held the benchmark at 7 percent, pointing to stubborn core price pressures. IMEF anticipates two reductions in the first half of 2026, dropping the rate to 6.5 percent by December.

Looking to 2027, IMEF barely budged its numbers. GDP growth stays at 1.8 percent. Inflation sits at 3.85 percent. The group has held the 2026 GDP figure at 1.3 percent since adding the USMCA angle to its survey in July 2025.