Mexico’s economy posted the first quarterly contraction since 2021, shrinking much more than expected on weaker domestic demand and uncertainty over tariffs by the US, the country’s top trade partner.
Gross domestic product fell 0.6% in the fourth quarter, more than all forecasts in a Bloomberg survey of economists that had a -0.2% median estimate. From a year ago, GDP expanded by 0.6%, below the 1% median projection, according to preliminary data published Thursday by the National Statistics Institute.
For the full year 2024, Mexico’s GDP expanded by 1.5%.
Latin America’s second-biggest economy is widely expected to slow for a fourth consecutive year in 2025 amid government retrenchment and tight fiscal conditions coupled with concern over policy direction in both Mexico and the US. Mexico’s President Claudia Sheinbaum — who started her term in October — is continuing to pledge strong local demand, while the threat of US tariffs on Mexico’s exports rattles markets and halts investments.
“A quarterly decline in Mexico’s GDP at the end of 2024 raises the risk of a recession in 2025 as domestic demand quickly loses momentum. US trade uncertainty, nationalist government policies, and growing fiscal constraints are still dragged.”
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