Mexico's GDP Falls in Third Quarter of 2025: INEGI

During the third quarter of 2025, Mexico’s Gross Domestic Product (GDP) fell by 0.3% in real terms compared to the previous quarter, according to the Timely Estimate of Quarterly GDP (EOPIBT) from the National Institute of Statistics and Geography (INEGI). This contraction breaks the stability observed earlier in the year and evidences a generalized slowdown, with the industrial sector being the primary driver of the decline. Furthermore, on an annual basis, GDP also registered a 0.3% fall. With this figure, national GDP has accumulated a mere 0.5% growth between January and September 2025 compared to the same period in 2024, casting doubt on the possibility of achieving official expansion targets for the year-end.

Primary activities (agriculture, livestock, and fishing): grew 3.2% quarterly and 3.0% annually, thanks to a favorable agricultural season and an increase in agro-food exports. Secondary activities (industry and manufacturing): fell 1.5% quarterly and 2.9% annually, affected by weak demand from the United States and high energy input costs. Tertiary activities (trade and services): showed a slight advance of 0.1% quarterly and 0.9% annually, driven by tourism and the digitalization of the financial sector.

The secondary sector was the Achilles’ heel of the quarter. Manufacturing, construction, and mining were impacted by lower investment and a slowdown in exports.

The global economic environment has worked against Mexico. Trade tensions with the United States, the primary destination for over 80% of Mexican exports, remain a risk factor.

During the quarter, the Mexican government continued negotiations with President Donald Trump’s administration to prevent the imposition of new tariffs on domestic products, particularly from the automotive and agro-food sectors. Adding to this, 2026 will see the review of the United States-Mexico-Canada Agreement (USMCA), which could generate additional pressures on investment and planning for exporting companies.

Beyond the international context, domestic performance also shows signs of weakness. Private consumption began to decelerate due to a loss of purchasing power and moderating wage growth.

The Bank of Mexico (Banxico) has maintained a restrictive monetary policy for much of the year, with a benchmark interest rate of 7.75%, making credit more expensive for businesses and households.

Given the GDP contraction, the central bank might cut its rate to 7.25% at its next meeting on November 6, seeking to stimulate economic activity towards the year-end. Conversely, gross fixed investment continues to be constrained by regulatory uncertainty and delays in infrastructure projects, while the labor market is beginning to show signs of cooling: lower creation of formal employment and a rebound in informality.

The GDP performance in 2025 contrasts with previous years. While in 2023 the economy grew by 3.1% and in 2024 it advanced merely 1.4%, this year’s results point to a year-end with figures close to zero.

According to INEGI’s records, the annual GDP variation in original figures was 0.0%, marking the lowest level since the pandemic. By sectors:

Tertiary activities expanded 1.0%, with stability in professional services and tourism.

The outlook for the fourth quarter is not encouraging. Projections from Capital Economics and other international financial firms anticipate that Mexico could end the year with growth between 0.3% and 0.5%, significantly below the 2.5% foreseen in the 2025 Economic Package.

“The headwinds are clear: trade uncertainty, less dynamic wage growth, and a stricter fiscal policy,” noted the British consultancy.

Moreover, the coming year is shaping up as a period of structural adjustments and political tensions, with the introduction of new fiscal reforms and the USMCA review. Globally, the strengthening dollar and rising international logistics costs could continue to impact Mexican exports.