The Mexican economy contracted on a month-over-month basis in September and grew just 0.5% in annual terms, according to preliminary data from the national statistics agency INEGI.

Compared to August, GDP declined 0.1% in September, INEGI reported Monday.

The contraction followed a month-over-month economic decline of 0.3% in August, according to the preliminary data.

Annual growth slowed considerably in September after expansions of 2% in July and 1.2% in August.

In the first half of the year, the Mexican economy grew 1.4% annually, a significant slowdown compared to the 3.2% growth recorded in 2023.

The publication of the latest INEGI data comes less than a week after the International Monetary Fund slashed its 2024 economic growth forecast for Mexico to 1.5% from 2.2%.

Earlier this month, the World Bank lowered its 2024 growth forecast for Mexico to 1.7%, citing high interest rates, a weaker peso and uncertainty for investors.

The federal Finance Ministry is far more optimistic, predicting 3% growth in 2024.

Mexico’s manufacturing sector contracts 0.5% annually in September 

According to INEGI’s preliminary data, the economic output of Mexico’s secondary sector declined 0.5% in September compared to the same month of 2023.

In contrast, the tertiary sector grew 0.9% on a year-over-year basis.

INEGI didn’t provide separate data for Mexico’s primary sector.

The September data for the secondary and tertiary sectors is weaker than that for August.

The secondary sector contracted 0.3% annually in August, while the tertiary sector grew 2.2%, according to INEGI’s “nowcasting” prediction.

The secondary sector contracted on a month-over-month basis in both August (-0.5%) and September (-0.1%), while the tertiary sector grew 0.3% in August and contracted 0.2% in September.

The secondary, or manufacturing, sector is a powerhouse of the Mexican economy, which is the 12th largest economy in the world.

In the first seven months of the year, the manufacturing sector accounted for just under 90% of Mexico’s export income, which totaled more than US $354 billion in the January-July period.

With reports from El Economista and El Sol de México