Economic growth in Mexico slowed in the second quarter of 2024, according to preliminary data published by the national statistics agency INEGI on Tuesday.

Seasonally adjusted data shows that GDP growth in Mexico was just 0.2% compared to the first quarter of the year, and 1.1% compared to the April-June period of 2023.

In the first three months of 2024, quarter-over-quarter GDP growth was 0.3%, while there was a 1.9% economic expansion in annual terms.

The latest preliminary data shows that the Mexican economy grew 1.5% in annual seasonally adjusted terms in the first six months of 2024.

The 1.1% annual growth between April and June was the worst economic result for any quarter in Mexico since the first quarter of 2021, when GDP contracted 1.6%.

The growth rate was well below the 2.16% consensus forecast of analysts surveyed by the Bank of Mexico. The Bank of Mexico’s near-record high 11% interest rate cooled demand in the Mexican economy, Bloomberg reported.

Non-seasonally adjusted annual data shows that the Mexican economy grew 2.2% in the second quarter, up from 1.6% in the first three months of the year.

Primary sector contracted in Q2

INEGI data shows that Mexico’s primary sector contracted 2.2% in annual seasonally adjusted terms in the second quarter of 2024.

The secondary sector grew 0.5% while the tertiary or services sector expanded 1.7%.

Compared to the first quarter of 2024, the primary sector contracted 1.7%, while the second and tertiary sectors each expanded 0.3%.

Expert views 

Alfredo Coutiño, head of Latin America Economic Research at Moody Analytics, predicted that the moderation in economic growth seen in the second quarter will “deepen” in the second half of 2024 as President Andrés Manuel López Obrador’s six-year term comes to an end and the political transition takes place.

During the past three decades, the Mexican economy has weakened in the second half of the years when a transfer of power occurred, he said.

Claudia Sheinbaum, who won the June 2 presidential election in a landslide, will be sworn in as Mexico’s first female president on Oct. 1.

Coutiño said that the latest INEGI data “doesn’t support growth higher than 1.5%” in 2024.

The International Monetary Fund is currently predicting that Mexico’s GDP will increase 2.2% this year, while Citibanamex is forecasting a 1.9% expansion.

Andrés Abadía, chief Latin America economist at Pantheon Macroeconomics, said that Mexico avoided an economic contraction in the second quarter of the year thanks to government spending on infrastructure projects, the strength of the labor market and declining core inflation.

“These factors compensated for the burden of restrictive financial conditions, the difficult external context and the poor climate,” he said.

The agriculture sector has been particularly hard hit by widespread drought conditions, which began to ease in June thanks to widespread rain.

With reports from El Economista, El Financiero, Bloomberg and Reforma