Mexico: Economy perks up in Q4
GDP reading: Mexico’s GDP expanded 0.8% on a seasonally adjusted quarter-on-quarter basis in Q4 2025, following a 0.3% contraction in Q3. In annual terms, GDP rose 1.6% in Q4, after declining 0.1% in Q3. Both the quarter-on-quarter and year-on-year readings were above market expectations.
Drivers: Relative to the previous quarter’s data, readings in Q4 improved for the services sector (+0.9% in seasonally adjusted quarter-on-quarter terms vs +0.2% in Q3) and the industrial sector (+0.9% vs -1.5% in Q3). In contrast, the primary sector deteriorated in Q4 (-2.7% vs +3.7% in Q3).
Panelist insight: On the outlook, Itaú Unibanco analysts said:
“Looking ahead, these results suggest a more favorable outlook for economic momentum, where we expect Mexico to continue on a gradual path toward its potential growth rate. For 2026 and 2027, we forecast GDP growth of approximately 1.5% and 2.0%, respectively. These figures also imply a narrowing negative output gap—an important consideration for Banxico’s monetary policy calibration, as the output gap remains one of the key channels supporting disinflation this year.”
Goldman Sachs’ Alberto Ramos said:
“Going forward, activity is expected to face headwinds from soft business confidence and peaking credit cycle. On the positive side, generous minimum wage increases, and a resilient labor market should offer some support to domestic demand. Investment is expected to continue to be impacted by both domestic and external uncertainty, in particular related to trade-policy direction in the US and the USMCA review.”