Official Optimism Amidst Economic Slowdown
The Mexican economy remains stagnant, with the Gross Domestic Product (GDP) growing minimally. Despite avoiding a recession, the growth rates are barely noticeable. The main question is whether Mexico is experiencing a prolonged economic standstill.
Optimism from the Secretaría de Hacienda
Edgar Amador, the head of the Secretaría de Hacienda (Ministry of Finance), maintains an optimistic outlook. He asserts that there is no widespread weakness in the economy, expecting a growth range of 0.5% to 1.5% real annual GDP by the end of this year.
In their report on the third quarter, Hacienda attributes the minimal growth to changes in international trade policies. They acknowledge that the direct effects of US tariff policy have become more apparent, along with supply disruptions caused by rainfall and blockages affecting freight and accommodation services.
Hard Data Reveals Economic Contraction
Mexico’s economy contracted by 0.30% annually in the third quarter of 2025, marking its first decline since 2021. This contraction is primarily due to the weak performance of the industrial sector.
According to data from the National Institute of Statistics and Geography (Inegi), secondary activities—comprising manufacturing, construction, mining, and electricity generation—fell by 2.85% compared to the same period in 2024. This marks four consecutive quarters of decline, a situation not seen since Q4 2018 to Q1 2021 when the industry experienced ten months of declines.
Tertiary activities, related to trade and services, grew by 0.91% annually, though it’s the weakest growth since Q1 2021. The agricultural sector (primary activities) increased by 3.03% due to demand and investment in the field, but its 4% contribution to GDP limits its overall impact.
On a quarterly basis, the PIB also showed a 0.29% decline, the first contraction since the October-December 2024 period.
Private Sector Analysts Paint a Gloomy Picture
Private sector analysts, however, are not optimistic. Banco Base estimates a high probability of the PIB contracting again in Q4 2025, leaving annual growth at a mere 0.54%.
For 2026, Banco Base anticipates a moderate recovery with growth slightly above 1%, but warns of significant risks to the national economy.
Banco Base’s economic team foresees continued growth at year-end, but with significantly weakened momentum and most short-term indicators pointing towards prolonged stagnation.
The Good and the Bad News
There are two sides to Mexico’s economic growth story: the good and the bad.
The positive news is that Mexico’s economy will not fall into recession in 2025, meaning it won’t decrease in size. The negative news is that the growth will be minimal, barely more than the nearly 1% growth during the previous administration.
The signs of a stagnant economy are clear: formal employment decreases while informal employment rises.
- Formal Employment: The National Occupation and Employment Survey (ENOE) reports a 311,903-job decline in formal employment from January to September.
- Informal Employment: Informal employment saw a 1,232,214-person increase during the same period.
The official explanation for this economic lethargy is external factors, but the evident decline in fixed capital investment, private sector confidence loss, deteriorating public services, lack of infrastructure investment, legal uncertainty, and prolonged T-MEC negotiations contradict this.
Undoubtedly, the economy is stagnant. How long this will last remains to be seen.
