Introduction
The Committee for Closing Economic Cycles in Mexico, part of the Instituto Mexicano de Ejecutivos de Finanzas (IMEF), met on May 5 and, after analyzing available indicators, concluded on May 21 that there are still not enough elements to declare the beginning of a recession.
The Committee’s Methodology
This committee applies rigorous methodological criteria: diffusion (multiple sectors affected), duration (persistence), and depth (magnitude of decline). Determining a recession is not straightforward, as it involves reviewing lagging, corrected, and sometimes contradictory data. That’s why the committee does not anticipate cycles but determines them when there is statistical certainty. Their role is descriptive, not predictive.
Economic Indicators and International Context
Despite the committee’s cautious stance, there is growing evidence of a losing economic dynamism. The GDP contracted -0.6% in Q4 2024 and grew a mere 0.2% in Q1 2025, according to preliminary data. Although there’s no official confirmation from INEGI, this behavior reinforces the signal of economic weakening.
One major concern is INEGI’s Coincident Indicator, which has been below its long-term trend for over 15 months. This indicator summarizes the current economic state using six key variables, such as formal employment, industrial production, and imports. When it falls below the reference threshold (100), it signals a weakened economy. Currently, five of its six components show sustained deterioration.
The international environment also weighs heavily. Donald Trump’s renewed trade war has hit the automotive sector, though exports to the US continue growing overall but show vulnerability signs. Internal consumption remains weak, production chains face pressure from tariffs, the exchange rate shows volatility, and fixed capital investment barely recovers.
Monetary Policy Response
The Bank of Mexico has responded by lowering its interest rate by 150 basis points in 2025, leaving it at 8.5%. The cut aims to stimulate the economy but acknowledges the real deterioration. Even with this measure, private sector analysts consulted by the central bank expect a growth of just 0.2% for the entire year.
International Perspectives
International organizations are less optimistic. The IMF forecasts a 0.3% contraction in Mexico’s GDP for 2025. HR Ratings warns that the probability of a technical recession is “very high.” Grupo Financiero BASE raises that risk to 95%, considering the high uncertainty environment.
Citi Mexico even asserts that a technical recession already exists, estimating two consecutive quarters of decline. However, their diagnosis is based on unconfirmed INEGI figures, requiring caution.
Key Questions and Answers
- Question: The committee has not yet declared a recession, but economic indicators suggest a slowdown.
- Question: The GDP contraction, INEGI’s Coincident Indicator below trend, and weak internal consumption are key indicators.
- Question: The central bank has lowered its interest rate by 150 basis points in 2025 to stimulate the economy.
- Question: The IMF forecasts a 0.3% GDP contraction, while HR Ratings and Grupo Financiero BASE warn of a high probability of a technical recession.
- Question: Citi Mexico asserts a technical recession based on unconfirmed figures, requiring caution.
