Mexico growth disappoints

Delia Paredes & Genevieve Signoret

(Hay una versión en español de este artículo aquí.)

In June, we laid out two scenario for the Mexican economy—one pessimistic, the other worse. Actual data have come in worse even than the drearier of our two June scenarios.

The current quarter started with surprisingly weak momentum

The latest GDP data confirmed the acceleration in activity we expected during the second quarter of the year. This acceleration, however, turned out to be much weaker than we anticipated.

Economic activity in Mexico lost momentum during Q2

Gross domestic product, annualized q/q percentage change

Source: Inegi.

In the year to June, growth compared with the like 2023 period, came to only 1.8%, and construction and services alone made meaningful positive contributions to growth. Moreover, on the demand side, private consumption and investment both slowed sharply.

Growth has been driven by the services and construction sectors

Real gross domestic product, January–June 2024 versus January–June 2023, percentage change

Source: Inegi.

Activity still looks disappointing after June

So far this quarter, the most recent IMEF PMI figures confirm that economic activity is currently weaker than what we forecast last June under our worse-case scenario.

Quarter-3 data suggest that the slowdown is continuing

Indicador IMEF (índice de difusión)

Source: IMEF.

We see the economy continuing to slow down for the rest of the year and doing so even more sharply than we forecast last June in our downside risk scenario. Compared with our outlook last June, the boost from election-related spending appears to be fading more quickly and the boost from external demand appears weaker.

TransEconomics delivers serenity to high–net-worth families and individuals. To learn more, request an appointment with an advisor.