The decline in economic activity from July to September was driven by the contraction of the industrial sector, which also saw a 2.7 percent year-on-year decline. This performance could not be offset by the combined impact of primary activities, including agriculture, fishing, and livestock, nor by tertiary activities, such as commerce and services.
To understand the negative performance of the annual Gross Domestic Product (GDP), it is worth noting that this was the first decline since the fourth quarter of 2021, when it registered a 0.9 percent year-on-year drop.
The decline in annual GDP in the third quarter of the year interrupted a 17-quarter streak of positive growth and confirms a consistent weakening since the first quarter of 2023, when GDP began to moderate its performance, registering an advance of 3.9%, far from the 4.6% observed between October and December of 2022.
From London, Andrés Abadía, Latin America economist at the consulting firm Pantheon Macroeconomics, explained that “all the main components of economic activity have weakened, so the overall outlook remains the same: domestic policy volatility, cuts in federal infrastructure spending, uncertainty surrounding the review of the USMCA and potential US tariffs, as well as the decline in remittances, which continue to affect capital spending, business confidence, and hiring in the private sector.”
The diagnosis is similar in Washington, where Alejandro Valerio, CEO and founder of Valerio Consulting Group, explained that the business sector’s pessimism has deepened since the constitutional reforms were approved.
Alberto Ramos, Latin America economist at Goldman Sachs, warned that with the revised data and the statistical carryover, the figures are consistent with “stagnation during 2025, which could result in a GDP of 0.4% for the entire year.”
Looking at quarterly performance, it is observed that the period from July to September of this year also saw a contraction of 0.3%, which was well anticipated by INEGI in its preliminary estimate.
This decline contrasts with the moderate positive performance of the two previous quarters: January to March, which saw GDP growth of 0.2%, and April to June, which experienced growth of 0.4%.
According to the revised historical series, the quarterly contraction for the period from July to September is the second since the last quarter of last year, when GDP contracted by 0.6%, and the third in six quarters, since the second quarter of 2014, when it fell by 0.1%.
The GDP contraction in the third quarter was also a result of the 1.5% decline in secondary activities, including industry and manufacturing; a drop that was not offset by the 3.5% expansion of primary activities or the moderate 0.2% growth of tertiary activities.
Source: eleconomista
