Mexican Economy Growth 2024
On a quarterly basis, Mexico’s GDP increased by just 0.2%, aligning with previous estimates. Although the annual growth for the second quarter shows some progress, the slow pace of growth reflects a significant cooling in economic activity.
Since the beginning of the year, economic activity has been on a declining trend, with seven consecutive periods of decline up to the second quarter, according to seasonally adjusted figures.
Notably, the performance across economic sectors in Mexico has been highly variable. The tertiary sector, which includes services and trade, recorded an annual growth of 1.5% in the second quarter.
While this growth is positive, it remains below the previously estimated 1.7%. On the other hand, the secondary sector, which encompasses industry and manufacturing, showed slower growth with an increase of only 0.4%, compared to the forecast of 0.5%.
Most striking is the performance of the primary sector, which experienced a significant decline. This sector, involving activities such as agriculture, fishing, and mining, saw a contraction of 2.5% year-on-year.
This decrease is far steeper than the previously projected contraction of 2.2%. The sharp decline adds to concerns about the impact of climate change and commodity price fluctuations on sectors dependent on natural resources.
Citibanamex analysts noted that higher public spending and sustained private consumption have not been sufficient to offset stagnation in exports and slowing private investment.
They assessed that, despite some boosts from government spending and domestic consumption, these factors were inadequate to drive higher growth.
Meanwhile, private investment remains stagnant and exports face pressure, indicating greater challenges for Mexico’s economy.
Ve por Más, an economic analysis institution, anticipates that the Mexican economy will not experience significant acceleration in the latter half of the year.
They observed that private consumption and investment remain moderate, while the external sector also shows weakness.
This reflects concerns about potentially greater slowdowns in the latter half of the year, especially with global uncertainties and changing international market dynamics.
Alfredo Coutiño, Director for Latin America at Moody’s Analytics, explained that recent data indicates Mexico’s economy has entered a contraction phase of the political cycle since June.
Coutiño elaborated that after the elections, the country has faced a shortage of election-related spending and began canceling temporary jobs created during the electoral process, contributing to negative economic impacts.
In the first half of the year, Mexico’s GDP grew by 1.8% year-on-year, a figure significantly lower than the 3.6% recorded for the same period last year.
This growth is the weakest since 2020, when economic activity plummeted by 10.9%. The growth in the services sector also showed a decline, with a growth rate of only 2.3% for the first half of the year, down from 3.8% in the same period last year.
The industrial sector, an important part of Mexico’s economy, also experienced slower growth with an increase of just 1.4%, below the 3.3% recorded in 2023.
Meanwhile, the primary sector saw a deeper decline, recording a drop of 2.6% year-on-year, the lowest for the same period since 2011.
The Global Indicator of Economic Activity (IGAE) report for June showed a monthly stagnation of 0.0%. Primary activities fell by 0.4% and tertiary activities by 0.2%, while secondary activities grew by 0.4%. This stagnation highlights economic instability and suggests that economic growth will remain limited in the near term.
Monex analysts highlighted that recent data presents a less encouraging scenario for the Mexican economy, marking a retreat from the moderate performance of the previous month.
They noted that in the first six months of the year, the IGAE grew by 1.69% year-on-year, the worst result since the same period in 2020.
Overall, Mexico’s economic performance reflects significant uncertainty and challenges. With ongoing slowdowns and mixed sector performance, the economic outlook for the latter half of the year remains uncertain.
