Mexico’s Economy Contracted in Q3 2025
According to the preliminary estimate of Mexico’s Gross Domestic Product (GDP) released by the National Institute of Statistics and Geography (Inegi), Mexico’s economy experienced an annual contraction of 0.3% in the third quarter of 2025, with seasonally adjusted figures.
If confirmed in the final GDP report, to be released on November 21, this will mark the first annual decline in economic activity since the fourth quarter of 2021.
The slowdown in economic activity during the third quarter was primarily driven by a significant downturn in the secondary sector, which showed an annual decline of 2.9%.
Following the release of this estimate, Edgar Amador Zamora, Secretary of the Ministry of Finance and Public Credit (SHCP), stated in a press conference that Mexico maintains strong macroeconomic fundamentals. He acknowledged that the data for the period was lower than expected by Hacienda, but expressed confidence in improved economic performance in the final quarter due to the contraction being concentrated in the industrial sector, which accounts for around 17% of the economy.
Mexico’s Unemployment Rate Continues to Rise
According to the National Occupation and Employment Survey (ENOE) published on Wednesday, Mexico’s unemployment rate ticked up slightly from 2.93% in August to 2.97% in September, nearing its historical levels.
This increase was due to the addition of 52,355 people to the unemployed population.
Originally, from January to September, unemployment increased by 0.5 percentage points.
The unemployment rate in September is the highest since August 2024, when it was reported at 3.03% of the Economically Active Population (PEA). Since then, the indicator had been on a downward trend until it reversed course in May of this year.
Meanwhile, the urban unemployment rate, which captures the reality of more formal labor markets, rose from 3.55% to 3.70%, making it the highest since July 2023.
The growth in both employment and unemployment in September was accompanied by a decrease in the Población No Económicamente Activa (PNEA), particularly among those classified as “available to work”.
Mexico’s Exports and Imports Show Interannual Growth
On Monday, Inegi reported that Mexico’s exports and imports of products showed interannual growth of 13.8% and 15.2%, respectively, in September.
Exports reached their highest growth rate in 14 months, increasing to $56,487.9 million, while imports recorded their best performance in 17 months, rising to $58,887.5 million.
The growth in Mexico’s external sales occurred amidst lower comparative tariff rates in the United States, Mexico’s integration into global value chains, primarily in North America, the US-China trade war, and market diversification.
The Fed Cuts Interest Rates for the Second Time This Year
The Federal Reserve of the United States (Fed) announced on Wednesday a second reduction of a quarter percentage point in its reference interest rates for the year due to increased labor market risks.
The decision to lower reference rates to a range of 3.75%-4%, which was anticipated by the markets, was approved by ten votes in favor and two against.
Fed Chair Jerome Powell tempered expectations from advocates for further rate cuts, including President Donald Trump, when he stated after the meeting that the possibility of another rate reduction at the committee’s December meeting is “far off,” and not even close.
“We still face risks,” Powell said during a press conference. “There were very divergent views in the committee’s deliberations during this meeting on how to proceed in December. A further reduction of rates at the December meeting is not an inevitable conclusion, nor even close.”
Eurozone Inflation Slightly Decreases
Inflation in the Eurozone decelerated slightly in October, aligning with the Banco Central Europeo’s (BCE) target.
The price increase stood at 2.1% year-on-year, down from 2.2% in September.
The underlying inflation — which excludes volatile energy and food prices and serves as a benchmark for experts — remained stable at 2.4%.
Within the Eurozone, inflation significantly moderated from its record 10.6% interannual rate in October 2022, amidst a robust increase in energy prices linked to the war in Ukraine.
Key Questions and Answers
- What was the preliminary GDP estimate for Mexico in Q3 2025? The preliminary GDP estimate for Mexico in Q3 2025 showed an annual contraction of 0.3%.
- Why did Mexico’s unemployment rate increase in September 2025? The unemployment rate increased due to the addition of 52,355 people to the unemployed population.
- What factors contributed to Mexico’s export growth in September 2025? Factors contributing to Mexico’s export growth included lower comparative tariff rates in the US, integration into global value chains, the US-China trade war, and market diversification.
- Why did the Fed cut interest rates for the second time in 2025? The Federal Reserve cut interest rates due to increased labor market risks.
- How did Eurozone inflation perform in October 2025 compared to the previous month? Eurozone inflation slightly decreased from 2.2% in September to 2.1% in October, aligning with the BCE’s target.
