Background on the Mexican Economy and Its Current State
In the midst of global economic uncertainty, Mexico’s economic activity reported a decline in July, signaling further cooling, according to data published by the National Institute of Statistics and Geography (Inegi).
July’s Economic Performance
The Indicador Global de la Actividad Económica (IGAE) reported a monthly decline of 0.9% in July, the largest drop since December of the previous year when it also fell by 0.9%.
Analysts from Monex stated, “The result for the period was weaker than anticipated by the opportune estimation, reinforcing signals of economic slowdown.”
The Indicador Oportuno de la Actividad Económica (IOAE) had forecasted a monthly decline of 0.5% for July.
Compared to the previous year, Mexico’s economy contracted by 1.2%.
Banamex strategists noted, “Perspectives for growth-driving factors suggest that the economy will remain weak in the coming months, amidst a very high level of uncertainty. Specifically, we project that GDP will fall 0.2% quarterly in Q3 (-0.1% prior to today’s IGAE data) and continue projecting a 0.4% GDP growth for 2025.”
Across-the-Board Declines
Upon reviewing the Inegi report, it was evident that the decline affected all three economic sectors, with primary activities experiencing the most significant drop.
Primary activities, which include hunting, fishing, agriculture, livestock, and similar sectors, saw a monthly decline of 3% in July – the largest since April’s 5.3% drop.
Secondary activities, encompassing industries, contracted by 1.2% monthly. Among these, manufacturing industries experienced the most significant decline at 1.6%.
Lastly, tertiary activities, which include services, saw a 0.4% decline. Within this sector, temporary lodging and food/beverage preparation services experienced the largest drop at 1.3%.
Key Questions and Answers
- Q: Who is responsible for publishing the economic data in Mexico? A: The National Institute of Statistics and Geography (Inegi) publishes the economic data in Mexico.
- Q: What does the 0.9% decline in July indicate about Mexico’s economy? A: The 0.9% decline in July signals further cooling of Mexico’s economy, reinforcing previous signs of slowdown.
- Q: Which economic sectors were most affected by the decline in July? A: Primary activities, such as agriculture and livestock, experienced the most significant drop at 3%, while secondary activities (industries) contracted by 1.2%. Tertiary activities, including services, saw a 0.4% decline.
- Q: How do analysts forecast Mexico’s economic growth for the near future? A: Analysts project that Mexico’s economy will remain weak in the coming months due to high uncertainty, with a potential 0.2% quarterly GDP decline in Q3 and an overall 0.4% growth projection for 2025.
