The IMF and the OECD just lately upgraded their financial progress forecasts for Mexico in 2025, however the nationwide statistics company INEGI delivered some unhealthy information this week: The financial system contracted in annual and month-over-month phrases in July.
Weighed down by weak main and secondary sector exercise, the Mexican financial system declined 1.2% yearly in July and 0.9% in comparison with June, INEGI reported.
Within the first seven months of the yr, GDP elevated simply 0.1% in comparison with the identical interval of 2024.
The annual contraction in July was the worst efficiency for the Mexican financial system in any month since February 2021.
The month-over-month contraction was the worst sequential outcome since April 2024.
Analysts from the Monex monetary group mentioned that the financial outcome for July was “weaker than anticipated” and strengthened “indicators of cooling in financial exercise” in Mexico.
INEGI printed its financial knowledge for July on Tuesday, the identical day that the Group for Financial Cooperation and Improvement raised its 2025 growth forecast for Mexico to 0.8% from 0.4%. Final week, the Worldwide Financial Fund revised upward its 2025 growth forecast for Mexico to 1% from a prediction in April of a 0.3% contraction.
Major sector plunges 12.2% yearly, secondary sector contracts 2.8%
INEGI’s knowledge exhibits that Mexico’s main sector, which incorporates agricultural, forestry and fishing actions, contracted 12.2% in July in comparison with the identical month of 2024.
The secondary sector, which incorporates manufacturing, building, mining and electrical energy era and distribution, shrank by 2.8% yearly.
The tertiary or providers sector was the one sector to develop, increasing 0.4% in comparison with July 2024. Nonetheless, that degree of progress was the weakest in 4 months for Mexico’s massive providers sector.
On a month-over-month foundation, all three sectors contracted in July. The first sector declined 3%, the secondary sector contracted 1.2% and the tertiary sector shrank by 0.4%.
Within the first seven months of the yr, the first sector grew 2%, the secondary sector contracted 1.5% and the tertiary sector expanded 0.8%.
Gabriela Siller, director of financial evaluation at Banco Base, mentioned that the “poor efficiency of the secondary sector, notably in building and manufacturing, presents a big threat for employment.”
The development sector contracted 4.1% yearly in July and 1.2% on a month-over-month foundation. The sector’s poor efficiency was attributed partly to the lower in authorities spending on infrastructure tasks.
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The manufacturing sector declined 1.8% yearly in July and 1.6% in comparison with June.
The numerous contractions of the first sector in July didn’t shock the chief economist on the brokerage agency Valmex.
“Major [sector] actions are characterised by being very unstable, with abrupt declines adopted by sharp upturns, reflecting their excessive publicity to climatic and seasonal elements,” Gerónimo Ugarte mentioned.
The month-over-month decline within the tertiary sector was attributed to elements together with the decline in inflows of remittances and a wetter-than-normal wet season in varied elements of the nation.
The outlook for the remainder of the yr
Banamex analysts anticipate that the Mexican financial system will stay weak within the coming months. In a written evaluation, they forecast that GDP will decline 0.2% within the third quarter of 2025 in comparison with the earlier three-month interval.
The Banamex analysts are predicting that the Mexican financial system will develop 0.4% in 2025, on par with the forecast of the brokerage agency Vector.
Mexico’s Finance Ministry is forecasting progress of between 0.5% and 1.5% this yr.
Uncertainty created by the US’ unstable commerce coverage has affected the Mexican financial system in 2025, though Mexican exports to the U.S. have continued to grow.
The USMCA free trade pact will be reviewed in 2026. The completion of the assessment course of ought to present higher certainty for the Mexican financial system and traders within the years forward.
With stories from El Financiero and El Economista
