Mexico’s GDP is barely growing, up just 0.4 percent so far in 2025 as a deep industrial slump pushes the economy to the edge of stagnation.
Mexico’s economy is running out of steam. New data from the national statistics agency show that output between January and September grew just 0.4 percent compared with the same period a year earlier, the weakest pace since the pandemic hit activity. That thin gain hides a clear loss of momentum in the third quarter, when gross domestic product fell 0.3 percent from the previous three-month period and slipped around 0.2 percent in annual terms.
The breakdown underlines how uneven the picture has become. Agriculture and other primary activities expanded 3.5 percent in the third quarter, helped by better weather after last year’s droughts. Services, which include trade, transport and tourism, managed a modest 0.2 percent increase. Together they have kept the year-to-date numbers slightly positive. The industrial sector, however, went firmly into reverse and erased much of that progress.
Industry drags on fragile growth
Official figures show that secondary activities, which include manufacturing, construction, and mining, shrank 1.5 percent between July and September. On an annual basis, industrial output has now logged six consecutive quarters of decline, a stretch not seen since the first phase of the health crisis. Within the sector, mining recorded one of the steepest falls, construction contracted again and manufacturing output was essentially flat, underscoring how weak investment and production have become.
This pattern matters for workers and for regional economies. Industry provides many of the best-paid formal jobs in northern manufacturing corridors and in construction hubs tied to public works and private real estate. When factories slow and building sites fall quiet, the impact reaches overtime pay, temporary contracts and demand for services from transport to small restaurants. The latest GDP report confirms what earlier monthly indicators of economic activity had already suggested through late summer: industrial Mexico has been losing altitude for months.
The slowdown is unfolding in a complicated external environment. New tariffs on some Mexican exports to the United States, softer global demand and uncertainty around future trade disputes have weighed on orders for manufacturers. At the same time, public investment has cooled after the peak of large infrastructure projects, limiting support for construction and related services, just as private developers have also become more cautious.
Yet not every signal is negative. Foreign direct investment reached a record of about 41 billion dollars in the first nine months of the year, boosted by new projects linked to nearshoring, even as reinvested profits grew more slowly. That inflow shows Mexico still looks attractive for many companies in the medium term, but it has not been enough to offset the short-term drag from weaker industrial output.
Mexican economy weakens
The third-quarter contraction has forced economists to rethink their outlook for 2025. At the start of November, surveys of private-sector analysts still pointed to full-year growth of about 0.5 percent. After the latest release from the statistics office, several banks and research houses cut their projections, some to between 0.2 and 0.4 percent for the year. A number of analysts now warn that if the economy posts another small decline in the final quarter, Mexico could slip into a technical recession marked by two consecutive quarters of falling GDP.
Business groups are also raising their voice. Research arms of the private sector argue that growth of half a percentage point or less is not enough to generate the formal jobs needed for a young population that continues to enter the labour market every year. They stress that an industrial recovery is essential if Mexico is to turn nearshoring interest into actual factories and long-term employment, rather than a short-lived shift of orders on paper.
The federal government, for its part, has tried to soften the message from the GDP figures. President Claudia Sheinbaum has acknowledged that this year’s growth is limited but insists that the economy remains solid, pointing to record foreign investment and official estimates that millions of people have left poverty in recent years. The Finance Ministry has echoed that view, describing the third-quarter drop as the result of temporary factors, including tariffs and weaker demand abroad, and not as proof of a broader collapse.
Both readings can be true at once. Mexico is attracting capital and still creating jobs, yet the speed of expansion has clearly slowed and the industrial engine is misfiring. The data show that the Mexican economy weakens at the margin even as some social indicators improve, a tension that will define the policy debate in 2025. Much will depend on whether industry stabilises, whether public and private investment pick up, and whether the global backdrop becomes more supportive. For now, Mexico is not in free fall, but it is moving uncomfortably close to stagnation.
