The preliminary figures released by the National Statistics Agency INEGI on Wednesday showed that Mexico’s economy grew faster than anticipated in the first three months of 2025.
A Reuters survey had predicted a growth of 0%. The GDP actually grew 0.2%.
This slight improvement comes following a contraction of 0.6% in the fourth-quarter of 2018. It keeps Latin America’s largest economy from entering a technical slump, which is usually defined by two consecutive quarters with negative growth.
The results were a pleasant surprise for economists, but they remain cautious.
This increase is mainly due to an increased activity in the primary sector, while some other important sections of economy showed signs of contraction or stagnation.
The recovery driven by agriculture masks the fragility beneath
The increase in agriculture, mining, and fishing was 8.1%, which offset a decline in the other industries.
The secondary sector (which includes manufacturing, industrial activities, and services) stagnated, while the third sector decreased by 0.3%.
Andres Abadia is the Chief Latin America economist at Pantheon Macroeconomics. He said that the increase quarter-onquarter enabled Mexico to avoid technical recession but did not change the overall picture of the economic malaise.
The US trade war is a persistent risk, he said, and he cited the increased uncertainty at home, restricted financial conditions, as well as a persisting increase in domestic risks. He added that early indicators suggest an uncertain outlook.
The tariffs threatened by President Donald Trump have exacerbated trade tensions, and caused economic instability, especially in Mexico which is heavily dependent on US exports.
Year-on-year growth beats estimates, but momentum weak
Mexico’s GDP increased by 0.8% between January and march, exceeding the economists’ prediction of 0.6%.
The primary sector was again the main driver of this expansion.
Analysts have stressed that recovery remains unequal, and fragile.
Kimberley Sperrfechter is Capital Economics’ Emerging Markets Economist. She noted that recent statistics show a bad start for the second quarter, and a persistent malaise in the economy.
Sperrfechter, speaking of the Mexican central banks, said that “this should pave way for another rate reduction by 50 basis points at Banxico’s meeting next Month.”
It would represent the third consecutive interest rate cut, which indicates that monetary policy is still being supported even though inflation has started to increase.
External pressure and policy levers
Banxico is facing a challenge as inflation begins to rise in April. The balance must be struck between encouraging growth and managing price pressures.
In recent months, the central bank cut rates substantially to boost the economy. However, their effectiveness may be limited due to ongoing external challenges.
Uncertainty is exacerbated by the volatile trade and political environments.
Mexico’s economy will continue to be plagued by low demand at home and fear of investment if it does not see a broad recovery across all sectors.
The post Mexico’s economy exceeds Q1 forecasts, but the outlook is still clouded by trade tensions could be updated as new information becomes available.
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