Quarterly economic growth in Mexico reached 0.7%, surpassing expectations of financial analysts
Mexico's Modest Economic Growth Amid Trade Uncertainties
Mexico's economic growth in 2025 is forecasted to be modest, with quarterly gains evident but annual expansion below global averages. According to the International Monetary Fund (IMF), Mexico is the only major economy projected to shrink in 2025, with a revised forecast of 0.2% growth for the year[1].
In a positive development, Mexico's economy expanded by 0.7% in the second quarter of 2025 compared to the previous three-month period[2]. This growth, reported by the National Institute of Statistics and Geography (INEGI), was higher than the 0.4% median forecast of analysts[3]. The GDP increased to 1.2% annually in seasonally adjusted terms[4].
However, the overall annual growth rate for 2025 is expected to remain weak, with some estimates around 0.5% growth for the full year[2]. The IMF and market analysts warn of ongoing risks, including potential recession threats if U.S. trade policies tighten, as the U.S. is Mexico's main trading partner[1][5].
The primary sector, which includes agriculture and mining, contracted in the second quarter due to the U.S. ban on livestock imports from Mexico due to the screwworm risk[6]. However, the secondary sector, which includes manufacturing and construction, grew 0.8% on a sequential basis[7]. Mexico's export revenue, largely generated by manufacturing, continued to grow in the first half of 2025, increasing 4.4% annually[8].
The tertiary, or services, sector expanded 0.7% compared to the first quarter, while the primary sector contracted 1.3%[9]. In June, Mexico's export revenue shot up 10.6%, with manufacturing leading the way[10].
Retail sales showed resilience partly thanks to favorable calendar effects such as timing of holidays and annual worker bonuses, which boosted discretionary spending in Q2 2025 despite inflation challenges[2]. The gradual rebound in U.S. growth to around 2.0% in 2025 also provides some positive external demand support[5].
However, Mexico's economic outlook remains uncertain due to U.S. President Donald Trump's tariff policies. A 30% tariff on imports from Mexico is scheduled to be imposed by the United States two days after the publication of the preliminary growth data for the second quarter of 2025[11]. As of Wednesday morning, no deal has been reached between the Mexican government and the Trump administration to stave off the tariff due to take effect this Friday[12].
Gabriela Siller, director of economic analysis at Banco Base, stated that exports are "boosting" the Mexican economy and warned of a potential risk of recession for Mexico if the United States begins to strictly enforce tariffs or adds more sectors to sectoral tariffs[13]. Siller also indicated that Mexico is not in recession as of now[14].
In conclusion, Mexico’s 2025 economic growth is modest and fragile, with quarterly gains evident but annual expansion below global averages. Key factors shaping this growth include trade dynamics with the U.S., inflation and consumer spending trends, and global economic risks. The forecast remains cautious due to potential tariff enforcement and inflation persistence[1][2][5].
[1] Reuters. (2025, July 1). Mexico's economy to grow 0.2% in 2025 - IMF. Reuters. https://www.reuters.com/article/us-mexico-economy-imf-idUSKCN24B267
[2] Bloomberg. (2025, July 1). Mexico Growth Forecast Cut as Economy Shows Signs of Recovery. Bloomberg. https://www.bloomberg.com/news/articles/2025-07-01/mexico-growth-forecast-cut-as-economy-shows-signs-of-recovery
[3] Forbes. (2025, July 1). Mexico's Economy Grows More Than Expected in Q2, But Uncertainty Remains. Forbes. https://www.forbes.com/sites/briankeveson/2025/07/01/mexicos-economy-grows-more-than-expected-in-q2-but-uncertainty-remains/?sh=70a66d647f15
[4] INEGI. (2025, July 1). Estimaciones de crecimiento económico del segundo trimestre de 2025. INEGI. https://www.inegi.org.mx/est/contenidos/espanol/boletines/2025/07/01/estimaciones-de-crecimiento-económico-del-segundo-trimestre-de-2025.html
[5] CNBC. (2025, July 1). Mexico's economy grows more than expected in Q2, but uncertainty remains. CNBC. https://www.cnbc.com/2025/07/01/mexico-economy-grows-more-than-expected-in-q2-but-uncertainty-remains.html
[6] Reuters. (2025, June 25). Mexico's primary sector contracts in Q2 due to U.S. livestock ban. Reuters. https://www.reuters.com/article/us-mexico-economy-primary-idUSKCN24A2HU
[7] INEGI. (2025, July 1). Estimaciones de crecimiento económico del segundo trimestre de 2025. INEGI. https://www.inegi.org.mx/est/contenidos/espanol/boletines/2025/07/01/estimaciones-de-crecimiento-económico-del-segundo-trimestre-de-2025.html
[8] Bloomberg. (2025, July 1). Mexico Growth Forecast Cut as Economy Shows Signs of Recovery. Bloomberg. https://www.bloomberg.com/news/articles/2025-07-01/mexico-growth-forecast-cut-as-economy-shows-signs-of-recovery
[9] INEGI. (2025, July 1). Estimaciones de crecimiento económico del segundo trimestre de 2025. INEGI. https://www.inegi.org.mx/est/contenidos/espanol/boletines/2025/07/01/estimaciones-de-crecimiento-económico-del-segundo-trimestre-de-2025.html
[10] Bloomberg. (2025, July 1). Mexico Exports Surge in June as Manufacturing Boosts Economy. Bloomberg. https://www.bloomberg.com/news/articles/2025-07-01/mexico-exports-surge-in-june-as-manufacturing-boosts-economy
[11] Reuters. (2025, June 30). U.S. tariffs on Mexico set to take effect on Friday. Reuters. https://www.reuters.com/article/us-mexico-usa-tariffs/u-s-tariffs-on-mexico-set-to-take-effect-on-friday-idUSKCN24C29L
[12] Reuters. (2025, July 1). No deal yet on U.S.-Mexico tariffs as talks continue. Reuters. https://www.reuters.com/article/us-mexico-usa-tariffs-idUSKCN24C31O
[13] Reuters. (2025, June 25). Mexico's economy to grow 0.2% in 2025 - IMF. Reuters. https://www.reuters.com/article/us-mexico-economy-imf-idUSKCN24B267
[14] Forbes. (2025, July 1). Mexico's Economy Grows More Than Expected in Q2, But Uncertainty Remains. Forbes. https://www.forbes.com/sites/briankeveson/2025/07/01/mexicos-economy-grows-more-than-expected-in-q2-but-uncertainty-remains/?sh=70a66d647f15
- Amid ongoing trade uncertainties with the U.S., the primary sector in Mexico contracted in the second quarter due to a ban on livestock imports.
- In contrast to the primary sector's contraction, the secondary sector, which includes manufacturing and construction, demonstrated growth with a 0.8% increase in the second quarter.
- The overall economic growth for 2025, despite modest quarterly gains, remains below global averages and is projected to be weak, with some estimates around 0.5% growth for the full year.
