Mexico City — Mexico’s economy demonstrated unexpected strength in the second quarter of 2025, according to preliminary data from the National Institute of Statistics and Geography (INEGI). Seasonally adjusted GDP rose 0.7 percent versus Q1 and 1.2 percent year-on-year, while export revenues jumped 10.6 percent in June, underscoring robust external demand despite global uncertainty.
economy shows resilience
Analysts attribute this economy shows resilience to solid performances in manufacturing and services. The secondary (industrial) sector expanded 0.8 percent on a quarterly basis, driven by strong factory output and construction activity. Meanwhile, the tertiary (services) sector grew 0.7 percent, as tourism, retail, and logistics rebounded from pandemic-era setbacks.
Agriculture remained a weak spot, contracting 1.3 percent sequentially amid adverse weather and lower livestock production. Still, the overall mix of gains and losses left the national economy in positive territory for a second straight quarter, a key milestone for policymakers aiming to avoid a recession.
Exports drive growth despite trade pressures
Exports emerged as a critical growth engine. INEGI reports that merchandise exports climbed 10.6 percent year-on-year in June, the strongest increase since October 2024. Demand from the United States fueled gains in automotive parts and electronics. Imports also rose by 4.4 percent, reflecting higher domestic demand for intermediate goods and raw materials.
Despite the imminent U.S. tariffs set to take effect, Mexico’s exclusion from broader protective measures under USMCA has shielded many industries. Economists warn, however, that any expansion of sector-specific duties could test this resilience in coming quarters.
Policy support and nearshoring benefits
Government measures also bolstered growth. Investment in infrastructure projects and nearshoring incentives attracted foreign firms seeking stable production bases closer to the U.S. market. Tax breaks and streamlined customs procedures under Mexico’s industrial promotion programs helped maintain healthy capital inflows.
“Strong export performance and firm domestic demand show that the economy is not in recession,” said Gabriela Siller, head of economic analysis at Banco Base. She noted that consumer spending, aided by wage increases and social transfers, underpinned the uptick in services.
Outlook balanced by risks
Looking ahead, risks remain. Moody’s warns that tighter credit conditions and political uncertainty could weigh on private investment. Meanwhile, rising global interest rates pose challenges for Mexico’s public debt servicing. Commodity price volatility may also impact the agricultural sector’s recovery.
The International Monetary Fund recently upgraded its outlook for Mexico, forecasting 0.2 percent GDP growth for 2025 and highlighting the resilience shown in Q2. Still, the IMF cautioned that sustained expansion depends on maintaining a business-friendly climate and avoiding protectionist backslides.
Sustaining momentum
To sustain this momentum, experts urge continued support for infrastructure, vocational training, and research & development. They also recommend enhancing fiscal transparency and deepening regional trade ties.
As Mexico heads into the second half of 2025, the economy shows resilience key phrase will remain central in economic debates. Maintaining balanced growth—across sectors and regions—will determine whether the recent bounce back becomes a lasting trend or a temporary reprieve.
