Signs of Economic Slowdown Grow in Mexico, But No Recession Yet
The Mexican economy is experiencing a period of marked slowdown, though it is not yet formally in recession, according to recently released indicators from the National Institute of Statistics and Geography (Inegi) and various specialists. Data such as a decrease in investment, weakening consumer spending, and a slump in industrial activity all point to a loss of momentum in the country’s economic engine.
Inegi’s coincident index—which summarizes the overall performance of the economic cycle—fell below its long-term trend in the most recent reports. This index, considered a “thermometer” for the economy, suggests economic growth is cooling off. Of its components, only the retail revenue index has avoided deterioration, while aggregate economic activity, industrial output, formal employment registered with the Mexican Social Security Institute (IMSS), and imports remain in a downswing phase.
Private consumption, a fundamental pillar of Mexico’s Gross Domestic Product (GDP), showed declines in nine out of the past twelve months and registered a year-over-year drop of 1.3% in March. Gross fixed investment decreased by 4.7% compared to last year, representing a clear challenge for future growth potential. Similarly, industrial activity dropped 1.3% annually, and the latest report from the IMSS showed the loss of more than 42,000 formal jobs during April 2025.
Despite this constellation of negative data, Mexico narrowly avoided a technical recession—defined as two consecutive quarters of contraction: following a 0.6% drop in the last quarter of 2024, GDP edged up by just 0.2% in the first quarter of 2025. The Mexican Economic Cycle Dating Committee, supported by the Mexican Institute of Finance Executives (IMEF), emphasized that there is still not enough evidence to declare an end to the expansionary period that began in June 2020, and clarified that their decisions are based on confirmed data, not projections.
Caution prevails among analysts. Janneth Quiroz, Director of Economic Analysis at Monex, pointed out that the coincident index falling below its trend does not necessarily mean an imminent recession. According to Quiroz, the slowdown is clear, but the resilience of employment and consumption, along with Mexico’s strategic role in global supply chains, could keep the economy from a deep contraction. Monex forecasts modest GDP growth of 0.3% for 2025.
Nevertheless, some experts take a less optimistic view. Luis Gonzali, Vice President of Investments at Franklin Templeton, considers a mild recession likely in the coming months, though he expects it to be shorter and less severe than previous downturns. Gonzali anticipates a phase of weakening in both consumer spending and the manufacturing and construction sectors. However, he believes that a resolution of trade disputes and the renegotiation of the USMCA towards 2026 could lay the groundwork for a rebound in investment and economic growth.
Despite this uncertainty, the Organization for Economic Cooperation and Development (OECD) has revised upward its growth projection for Mexico in 2025, partly due to persistently low unemployment and the continued resilience of consumer spending as shown in international data.
In summary, while the Mexican economy is showing clear signs of deceleration and faces significant risks, current data still does not confirm a formal recession. Factors such as strong employment numbers, the dynamics of domestic consumption, and opportunities arising from nearshoring and regional integration could prove crucial in navigating the adverse environment. The development of these indicators will be key to anticipating whether Mexico manages to stabilize its economy or if a contraction will ultimately take shape in the coming months.
