Introduction
Economic forecasts for Mexico have been gloomy since the end of last year. Surveys conducted by Banxico and private entities, along with reports from multilateral organizations, have downgraded their growth projections for the Mexican economy in 2025. The reasons are well-known: investment uncertainty due to judicial reform, an inevitable reduction in public spending following the 2024 overspending, and potential tariff effects on confidence.
Positive Signs: PIB Estimates and Sectoral Performance
However, in recent weeks, some indicators have shown an apparent “resilience” of the Mexican economy that has surpassed certain expectations. The timely estimation of GDP for the first quarter of the year has sparked cautious optimism. According to Inegi’s data presented last week, the economy grew by 0.2% compared to the previous quarter and 0.6% compared to the same quarter last year.
This growth was primarily driven by primary activities, which expanded by 8.1% compared to the previous quarter, while secondary activities declined by 0.3%, and tertiary activities remained flat at 0%. This is indeed good news, as a global negative growth was anticipated, potentially placing Mexico in a technical recession with two consecutive quarters of negative growth.
One hypothesis, supported in part by US figures, relates to a reaction to tariffs. With uncertainty surrounding which products, to what extent, and which countries will be affected, many US buyers decided to expedite purchases to avoid higher tariffs later. This was reflected in the secondary sector and confirmed by the significant increase in US imports during the first quarter, negatively impacting its GDP. However, it also affects primary activities. Remember that this isn’t just about agricultural products; it includes other significant Mexican exports like beer.
Mixed Indicators: Consumption, Investment, and Business Confidence
Other recently published indicators paint a more pessimistic picture for the economy. The timely consumption indicator fell by 0.1% in March compared to February; investment declined by 7.8% in February compared to the previous year, and business confidence data continues to plummet.
Formal employment data is also unencouraging: by April 30, 2025, the IMSS reported a total of 22.4 million affiliated jobs, with a decline of 47,000 in April and very sluggish job creation for the year compared to previous years.
Conclusion
Creating stories to convince oneself that the economy is better than forecasts and current indicators suggest serves no purpose. While it’s understandable to “sell the camel,” clear actions are necessary given the economic situation and challenges it will continue to face.
Key Questions and Answers
- Q: Are recent economic indicators suggesting Mexico’s economy is doing better than expected?
A: Yes, the timely GDP estimate for Q1 2025 shows a positive growth of 0.2% compared to the previous quarter and 0.6% compared to Q1 2024, surpassing expectations.
- Q: What explains the growth in primary activities and moderate decline in secondary activities?
A: One hypothesis suggests that buyers anticipated tariffs by expediting purchases, impacting both secondary and primary sectors. The growth in primary activities can be attributed to agricultural products and other significant Mexican exports like beer.
- Q: How do other recent indicators portray the Mexican economy?
A: Despite positive GDP growth, consumption fell by 0.1% in March vs February, investment declined by 7.8% in Feb 2025 vs Feb 2024, and business confidence data continues to drop.
- Q: What should be the focus given these mixed signals?
A: Clear and concrete actions are necessary to address the economic challenges, as the current Plan Mexico lacks direct impact on growth.
