Mexico’s economy experienced a contraction of 0.6% in the fourth quarter of 2024, according to seasonally adjusted figures from the National Institute of Statistics and Geography (Inegi). If confirmed in the final Gross Domestic Product (GDP) report due on February 21, this would mark the first decline in economic activity since the third quarter of 2021.
Market Expectations Met
The market had anticipated a negative economic performance for the final quarter of the year, though the contraction was slightly worse than the 0.2% decline projected in a Reuters survey. The data provides a sobering snapshot of the Mexican economy as it closed out 2024.
On an annual basis, GDP growth registered a modest 0.6% increase from October to December 2023 compared to the same period in 2024. However, this represented the slowest growth in 14 quarters, dating back to the second quarter of 2021, and marked the second consecutive annual quarterly slowdown.
Annual Growth Slows to 1.5%
Inegi’s preliminary figures suggest that the economy grew by an average of 1.5% throughout 2024, significantly lower than the 3.3% expansion achieved in 2023. This slowdown comes during the final year of President Andrés Manuel López Obrador’s administration, underscoring mounting economic challenges as his term concludes.
Sector Analysis: Services and Trade Show Resilience
A closer look at the data reveals that only the tertiary sector, which includes services and commerce, recorded positive growth. This sector saw a 0.3% advance compared to the previous quarter, translating to an annual growth rate of 2.2%.
In contrast, the primary and secondary sectors dragged down overall economic performance:
- Secondary Activities: Industrial activities, which encompass manufacturing, mining, construction, and utilities, registered a decline.
- Primary Activities: Agricultural and related activities also contributed negatively to GDP, compounding the economic slowdown.
The contraction in the fourth quarter highlights persistent economic vulnerabilities as Mexico grapples with global economic headwinds, inflationary pressures, and domestic challenges. The services and trade sectors’ resilience provides a glimmer of hope, but the decline in industrial and agricultural output underscores the need for strategic economic interventions.
As Mexico awaits the final GDP data release in February, policymakers and economists will closely monitor economic indicators to assess the trajectory for 2025. The government faces pressure to stimulate growth and address sectoral imbalances to ensure a more robust and inclusive economic recovery.
Mexico’s economy experienced a contraction of 0.6% in the fourth quarter of 2024, according to seasonally adjusted figures from the National Institute of Statistics and Geography (Inegi). If confirmed in the final Gross Domestic Product (GDP) report due on February 21, this would mark the first decline in economic activity since the third quarter of 2021.
