Mexico: Economy slips into contraction in the third quarter of 2025
GDP reading: Mexico’s GDP declined 0.3% on a seasonally adjusted quarter-on-quarter basis in Q3, following a 0.6% expansion in the prior quarter and in line with market expectations.
Drivers: Relative to the previous quarter’s data, readings in Q3 worsened for the services sector (+0.1% in seasonally adjusted quarter-on-quarter terms vs +0.8% in Q2) and the industrial sector (-1.5% vs +0.7% in Q2). In contrast, the reading for the primary sector improved in Q3 (+3.2% vs -2.4% in Q2).
In annual terms, economic output shrank 0.2% in Q3, following a flat reading in the prior quarter.
Panelist insight: On the data and outlook, Itaú Unibanco analysts said:
“Activity expectedly decelerated in the second half of the year, with a statistical carry-over for 2025 at 0.6%. This behavior was already anticipated, after a very strong 2Q25. Looking ahead, we expect Mexico’s growth to continue receiving some support from external factors, but these will become less relevant, compared to the beginning of this year. The outlook for domestically driven sectors will remain mixed, with a slowdown in local services and a contraction in investment. However, investment could continue to show signs of improvement, based on the start of public projects, such as railways construction and road maintenance.”