Mexico: Economy slips into contraction in the first quarter of 2026
GDP reading: Mexico’s GDP contracted 0.8% on a seasonally adjusted quarter-on-quarter basis in Q1, following 0.9% growth in the previous quarter. Q1’s reading was the weakest since Q4 2024 and a far steeper downturn than markets expected.
Contractions seen across sectors: Relative to the prior period’s data, readings in Q1 worsened for the services sector (-0.6% in seasonally adjusted quarter-on-quarter terms vs +0.9% in Q4) and the industrial sector (-1.1% vs +0.9% in Q4). Finally, the variation in the primary sector was the same as in the prior quarter (-1.4% in Q1 and Q4).
In annual terms, GDP expanded 0.1% in Q1, following 1.8% growth in the previous quarter and also undershooting market expectations.
Panelist insight: On the data and outlook, Itaú Unibanco analysts said:
“The data confirms that economic activity decelerated as expected in the first quarter, leaving a statistical carryover of -0.2% into 2026. This follows weakness in the annual growth in 1Q25, when recession concerns briefly emerged, but contrasts with the strong 4Q25 print, which mechanically boosted base effects. Recent March trade data suggest that exports contributed positively to 1Q growth, while IGAE indicators point to soft performance in services, agriculture, and mining. Looking ahead, nearterm momentum remains subdued, but we still anticipate a gradual recovery supported by firmer domestic demand and a modest boost from the 2026 FIFA World Cup, which we estimate will add 0.1pp to annual GDP growth.”