Key Economic Developments and Analysis
The Mexican economy reported the largest quarterly expansion in Gross Domestic Product (GDP) over five quarters, from October to December of the previous year, according to preliminary estimates released by INEGI.
In the final quarter of the preceding year, there was an 0.8% advance in GDP compared to the third quarter of 2025, following a 0.3% contraction in economic activity from July to September.
This growth reversed the concern of two consecutive negative quarters, typically identified as a recession. Compared to previous quarters, this performance was the most dynamic in five trimesters since Q4 2024.
Expert Opinions
According to analysts from Banco Base, Goldman Sachs, and Pantheon Macroeconomics, this growth was a “rebound” following the 0.3% contraction in Q3 2025.
Gabriela Siller, director of economic analysis at Banco Base, noted that the rebound might be due to unlocked government investment projects, increased consumer spending, and a smaller reduction in public investment in physical infrastructure.
Sectoral Performance
Service and Secondary Sectors Lead the Way:
The preliminary data from INEGI indicates that tertiary activities (services and trade) and secondary activities (industry, mining, and construction) demonstrated the most dynamic performance at 0.9%.
However, primary activities (agriculture, fishing, and livestock) experienced a 2.7% contraction.
Andrés Abadía, chief economist at Pantheon Macroeconomics in London, explained that the general improvement in industry and services during Q4 2025 compensated for the renewed weakness in the volatile agricultural sector, fully reversing the Q3 2025 contraction.
Importance of Services Sector
The service sector, accounting for 65% of the economy, played a crucial role in achieving the positive GDP annual figure due to its growth.
Industrial Sector Signals
Industry Rebounds:
Banorte economists explained that the industry grew by 0.9%, recovering some ground after a 1.5% decline in Q3 2025.
The impulse likely came from construction, primarily due to building activities, with manufacturing also being favorable but with some heterogeneity.
Transportation and mining sectors also appeared to have improved, though with more limited performance.
Gabriela Siller from Banco Base mentioned that the closure of public spending taps in 2025 affected construction, which was already struggling due to uncertainty from the judicial reform.
The Q4 2025 signal suggests that public spending is gradually opening up.
Climate Conditions and Primary Activities
Challenges in Primary Activities:
Banorte analysts pointed out that the 2.7% decline in primary activities was due to a challenging comparison base of 3.5% positive growth in the preceding quarter.
They noted that “on the margin, climate conditions were a bit more challenging with multiple floods impacting crops in October, while some roadblocks affected distribution in November.”
