Mexico’s GDP Contracts as Manufacturing Activity Declines

MEXICO CITY, October 30, 2025 — Mexico’s economy contracted by 0.3% in the third quarter of 2025 compared with the previous three months, according to preliminary data released by the National Institute of Statistics and Geography (INEGI). The figure was in line with forecasts from economists polled by Reuters and marks a notable slowdown for Latin America’s second-largest economy.

The contraction ended two consecutive quarters of growth and was largely driven by a weakening in industrial and manufacturing activity, which declined by 1.5% sequentially. This slowdown outweighed gains in the primary sector, which includes agriculture, fishing, and mining, where output rose by 3.2%, and a modest 0.1% expansion in services.

Year-on-Year Performance

On a year-on-year basis, Mexico’s GDP fell by 0.2% in Q3 2025, matching analysts’ expectations. This marks the first annual decline in quarterly GDP since early 2021, when the country was still recovering from the economic impact of the COVID-19 pandemic.

The slowdown highlights ongoing challenges for Mexico’s industrial sector, which plays a crucial role in exports to the United States, particularly in manufacturing and electronics. Analysts have pointed to weaker industrial output as a key factor dampening overall economic growth, alongside external pressures such as fluctuating U.S. demand and trade dynamics.

Outlook and Implications

While Mexico’s primary sector and services show resilience, policymakers and investors are closely monitoring industrial performance and its potential impact on broader economic trends. Sustained weakness in manufacturing could affect employment, trade balances, and fiscal revenues in the coming quarters.