Economic growth in Mexico slowed markedly in annual terms in April compared to March, while the economy contracted on a month-over-month basis, according to official data.

The national statistics agency INEGI reported that the economy grew 0.9% in April compared to the same month of 2023.

Annual growth in March was a much higher 3.3%, while the economy expanded 1.9% in the first quarter of 2024 compared to the same period of last year.

INEGI data also shows that the Mexican economy contracted 0.6% in April compared to the previous month.

The newspaper Reforma reported that the month-over-month contraction, as measured by INEGI’s Global Indicator of Economic Activity (IGAE), was the worst result for the Mexican economy in 32 months.

On an annual basis, the primary sector of the economy contracted 1% in April, while the secondary and tertiary sectors grew by 0.6% and 1.3%, respectively.

On a month-over-month basis, Mexico’s primary, secondary and tertiary sectors all went backward. The primary sector contracted 2.5%; the secondary sector declined 0.5%; and the tertiary sector — which contributes to more than 60% of Mexico’s GDP — shrank by 0.6%.

Mexico’s manufacturing industry — part of the secondary sector of the economy, an export powerhouse and a major recipient of foreign investment — declined 1.5% in April compared to the previous month.

Gabriela Siller, director of economic analysis at Mexico’s Banco Base, described the IGAE data for June as “very bad.”

The Mexican economy grew 3.2% in 2023, but the pace of growth is forecast to slow this year, in part due to a slowdown in the United States economy.

The International Monetary Fund is currently predicting a 2.4% expansion this year, while the consensus forecast of more than 30 banks, brokerages and research organizations recently surveyed by Citibanamex is that the Mexican economy will expand 2.1% in 2024.

In another post to the X social media platform, Siller said that economic growth in Mexico “can increase” if the country takes advantage of the nearshoring opportunity.

For that to occur, Mexico needs to be promoted as a nearshoring destination; water, electricity and highway infrastructure needs to be built; and the country needs “certainty in internal economic policy,” the analyst wrote.

With reports from El Economista and Reforma