Overview and Background
The Mexican economy demonstrated a slight improvement in August, with the Indicador Global de la Actividad Económica (IGAE) reporting a 0.6% increase compared to the previous month, according to data released by the Instituto Nacional de Estadística y Geografía (Inegi).
Better-than-Expected Performance
This growth surpassed the 0.1% projection previously estimated by Inegi through the Indicador Oportuno de la Actividad Económica (IOAE). Consequently, Mexico’s economy achieved its second-best monthly growth this year, just below February’s 0.8% expansion.
Economic Slowdown Throughout the Year
Despite this positive development, Mexico’s economy has displayed signs of cooling throughout 2025. Although a recession predicted for the year’s early months has been ruled out, economic activity remains weak.
“While today’s surprise is welcome, the recent trend and outlook for economic growth determinants suggest that growth will remain weak for the rest of the year, amidst a highly uncertain context,” analysts from Banamex stated.
Government and Market Projections
The Secretaría de Hacienda y Crédito Público (SHCP) anticipates economic growth this year within a range of 0.5% to 1.5%. However, market consensus places itself at the lower end of this official projection, with Citi’s latest Encuesta indicating an average annual growth rate of 0.5%. Estimates vary from Scotiabank and Valmex’s projected contraction of 0.1% to Bankaool’s forecasted growth of 0.8%.
Recovery in Two Sectors
The Inegi report highlighted that two economic sectors recovered in August. The primary sector, focusing on agriculture, fishing, livestock, and similar activities, expanded by 14.5% compared to the previous month after a 3.2% decline in July.
Meanwhile, tertiary activities—comprising services—also recovered in August, albeit to a lesser extent. They grew by 0.5% after a 0.4% decrease in July.
Notable growth was observed in retail commerce, which expanded by 1.8%, while support services for businesses and waste management contracted by 1.4%.
Industries Continue to Decline
In contrast, secondary activities—encompassing industries—reported their third consecutive month of decline in August, with a 0.3% contraction.
Construction experienced the most significant drop, falling 2.2% compared to July, while mining contracted by 0.7%. Economists from Pantheon Macroeconomics, led by Andrés Abadía, expect the industrial sector to remain under pressure until year-end due to persistent weakness in construction, manufacturing, slower public works execution, and moderated exports to the United States.
Annual Stagnation
Although the annual comparison of the IGAE result exceeded expectations, it showed stagnation in August at 0.0%, with Inegi estimating a 0.6% contraction.
This stagnation follows a 1.2% decline in July, and analysts from Monex note that the Mexican economy faces ongoing challenges due to weak construction and manufacturing performance, trade policy uncertainties, supply chain disruptions, and the domestic political-economic environment.
Key Questions and Answers
- Q: What was the growth rate of Mexico’s economy in August? A: The Indicador Global de la Actividad Económica (IGAE) reported a 0.6% increase in August.
- Q: How does Mexico’s economic growth look for the rest of 2025? A: Analysts predict that the Mexican economy will continue to show weak growth for the remainder of 2025, with construction and manufacturing sectors underperforming.
- Q: What are the government and market projections for Mexico’s economic growth this year? A: The Secretaría de Hacienda y Crédito Público (SHCP) anticipates growth between 0.5% and 1.5%, while market consensus, as per Citi’s Encuesta, estimates an average annual growth rate of 0.5%.
- Q: Which sectors showed recovery in August? A: The primary sector, including agriculture and livestock, and tertiary activities, such as services, both demonstrated recovery in August.
- Q: What challenges does Mexico’s economy face? A: The Mexican economy faces challenges due to weak construction and manufacturing performance, trade policy uncertainties, supply chain disruptions, and the domestic political-economic environment.
