The Mexican economy contracted 0.3% in annual seasonally adjusted terms in the third quarter of 2025, according to official preliminary data published on Thursday.
A 2.9% year-over-year decline in secondary sector activity, which includes Mexico’s large manufacturing industry, caused the annual contraction between July and September.
Mexican economy contracts 0.6% in September, capping weak Q3
The primary and tertiary sectors both grew in annual terms in the third quarter, according to the national statistics agency INEGI.
The annual contraction in Q3 was the first year-over-year decline for the Mexican economy in any quarter since the final three months of 2021.
The economy also contracted 0.3% compared to the second quarter of the year, according to INEGI’s preliminary data. The quarter-over-quarter contraction was the first since the final three months of 2024.
Global uncertainty, weak domestic consumption growth, lower government spending on infrastructure projects and a decline in incoming remittances are among the factors weighing on the Mexican economy.
INEGI will publish final economic data for the third quarter on Nov. 21.
Secondary sector slowdown stunts growth
In addition to contracting 2.9% on an annual basis, the secondary sector declined 1.5% in the third quarter compared to the previous three-month period.
The secondary sector includes manufacturing, construction, mining and electricity generation.
Gabriela Siller, director of economic analysis at Banco Base, highlighted that the secondary sector has now contracted in annual terms during four consecutive quarters.
Secondary sector activity has been declining even as Mexico’s export revenue — which mainly comes from the shipment abroad of manufactured goods — continues to grow despite the U.S. government’s imposition of tariffs on a range of Mexican products.
Mexico’s primary sector grew 3% in annual terms in the third quarter and 3.2% compared to the second quarter.
The tertiary, or services, sector grew 0.9% annually between July and September and 0.1% compared to the second quarter.
An up-and-down economy
In annual terms, the Mexican economy has contracted twice and grown twice during the past four quarters.
¿Señales de recesión?
En México, las actividades secundarias registraron una caída trimestral de 1.47%.
Desde 1993, solamente en 12 ocasiones la caída trimestral de las actividades secundarias ha sido igual o mayor al 1% y 10 de estas caídas ocurrieron en periodos de recesión.…— Gabriela Siller Pagaza (@GabySillerP) October 30, 2025
GDP declined 0.6% in the final quarter of 2024 before increasing 0.3% in the first three months of 2025 and 0.6% in the second quarter.
In the first nine months of 2025, the Mexican economy expanded 0.5% in annual seasonally adjusted terms and just 0.2% in original, or unadjusted, terms.
The Mexican economy’s pace of growth in the first nine months of the year represents a significant slowdown compared to the 1.2% economic expansion recorded in 2024.
It appears inevitable that in 2025 Mexico will record its worst economic result since 2020, when the COVID-19 pandemic and associated restrictions caused an 8.5% contraction.
With reports from La Jornada
