Mexico’s Economy Contracts 0.3% in 3Q25: Mining and Energy Sectors Decline

Mexico’s Economy Faces First Annual Decline Since 2021: 3Q25 GDP Contracts by 0.3%

In a troubling turn for Mexico’s economic landscape, preliminary data from the National Institute of Statistics and Geography (INEGI) reveals a 0.3% contraction in the country’s GDP for the third quarter of 2025 compared to the same period last year. If this figure is confirmed in the final report scheduled for November 21, it will mark the first annual decline in economic activity since the fourth quarter of 2021.

The downturn has been primarily attributed to a significant 2.9% drop in secondary activities, which encompass critical sectors such as manufacturing, construction, mining, and energy generation. The services and commerce sector, which constitutes the largest portion of the GDP, also experienced a decline of 0.9%. In contrast, agriculture saw a modest growth of 3%, but this was not enough to counterbalance the substantial losses in industry and services, which together account for over 90% of Mexico’s total economic output.

On a quarterly basis, GDP also contracted by 0.3%, reinforcing concerns about weakening economic activity that the Bank of Mexico (Banxico) has been monitoring since late 2024. “The decline in Q3 activity was already incorporated into our statistical model,” stated Alberto Ramos, chief economist for Latin America at Goldman Sachs. He maintained a cautious growth forecast of 0.5% for 2025, citing ongoing domestic and external policy uncertainties, diminished business confidence, and efforts toward fiscal consolidation.

Inflation figures for early October showed a slight decrease to 3.63%, down from 3.78%, remaining within Banxico’s target range of 3% ±1 percentage point. Both core and non-core components of the National Consumer Price Index (INPC) indicated signs of moderation, offering a glimmer of hope amid the economic downturn.

The International Monetary Fund (IMF) has projected a modest economic expansion of 1% for Mexico in 2025, with a slight increase to 1.5% in 2026. However, the IMF warns that the current slowdown is largely due to stringent monetary and fiscal policies, uncertainties surrounding tariffs, and the impending review of the United States-Mexico-Canada Agreement (USMCA).

In its recommendations, the IMF emphasized the need for Mexico to address critical infrastructure bottlenecks, enhance the business climate, strengthen judicial independence, and combat corruption and crime. It urged the government to resolve trade tensions with the United States, deepen regional integration under the USMCA, and diversify trade partnerships with the European Union and other regional economies, such as Brazil.

As Mexico navigates these economic challenges, the focus will be on implementing effective policies to stimulate growth and restore confidence among businesses and consumers alike.