Background on the Mexican Economy and INEGI
The Mexican economy experienced an annual contraction of 0.3% in the third quarter of the year, according to deseasonally adjusted figures from INEGI’s Estimation of Gross Domestic Product (GDP). The Instituto Nacional de Estadística y Geografía (INEGI) is Mexico’s official statistics agency, providing crucial economic data and analysis.
Key Economic Developments
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 economic downturn was primarily driven by the secondary sector, which saw a 2.9% annual decline compared to July-September 2024 performance. This sector includes manufacturing, construction, mining, and energy generation.
Additionally, the tertiary sector, comprising services and commerce, also experienced a 0.9% annual decline.
On the other hand, primary sector activities such as agriculture and livestock showed an annual positive growth of 3%. However, this growth was insufficient to offset the declines in the industrial and service sectors, which together account for over 90% of Mexico’s GDP.
Q3 Performance and Banco de México’s Warning
Examining the July-September period, there was also a 0.3% contraction in economic activity, confirming the weakening of the economy that Banco de México (Banxico) had previously warned about since the third quarter of the previous year.
According to Alberto Ramos, economist for Latin America at Goldman Sachs, the third-quarter decline was anticipated in their statistical model. Consequently, they maintain their growth forecast of 0.5% for the entirety of 2025.
Ramos, from New York, anticipates that real activity will be affected by uncertainties in domestic and foreign policies, weakened business confidence, and ongoing fiscal consolidation efforts.
Key Questions and Answers
- What is the annual contraction rate of Mexico’s economy in Q3 2024? The Mexican economy experienced a contraction of 0.3% in the third quarter.
- Which sectors primarily contributed to this decline? The secondary sector, including manufacturing, construction, mining, and energy generation, saw a 2.9% annual decline. The tertiary sector, comprising services and commerce, also experienced a 0.9% annual decline.
- What was the performance of the primary sector? The agriculture and livestock sector showed an annual positive growth of 3%, but it was not enough to compensate for the declines in other sectors.
- What does this economic performance indicate about Mexico’s future? If confirmed, this will mark the first annual decline in economic activity since Q4 2021. Real activity is expected to be affected by uncertainties in domestic and foreign policies, weakened business confidence, and ongoing fiscal consolidation efforts.
