MEXICO CITY, Nov 27, 2025 (BSS/AFP) - Mexico's central bank on Wednesday halved its 2025 growth forecast for Latin America's second-biggest economy to 0.3 percent, after an unexpected contraction in third-quarter activity.

The decline recorded between July and September "represented a greater weakness in the Mexican economy than previously anticipated," the bank said in its quarterly inflation report.

The economy contracted 0.3 percent year-on-year in the third quarter over fears surrounding trade with the United States, which accounts for over 80 percent of Mexican exports.

President Donald Trump has threatened to impose 30-percent tariffs on Mexican imports but agreed in October to allow more time for both countries to reach an agreement.

Mexican steel, aluminum and car parts industries have already been affected by Trump's global trade offensive.

The Bank of Mexico warned that "the shift in the economic policy of our main trading partner could affect the pace of its economic expansion and lead to lower external demand" for Mexican goods.

The United States, Mexico and Canada are partners in a free-trade agreement which Trump wants to renegotiate.

The deal is up for review next year.