Mexico’s GDP Growth Slows to 1.3% in 2024, Lowest in Three Years

Mexico’s economy grew by a modest 1.3% in 2024, marking its weakest performance in three years. The National Institute of Statistics and Geography (INEGI) released this preliminary estimate, revealing a continued slowdown from the post-pandemic rebound.

The 2024 figure represents a significant drop from the 3.2% growth seen in 2023. Economists attribute this deceleration to several factors, including global economic headwinds and domestic policy uncertainties.

The manufacturing sector, a key driver of Mexico’s economy, showed signs of stagnation throughout the year. Mexico’s service sector proved to be the economy‘s saving grace, expanding by 2.3% in 2024.

This growth helped offset weakness in other areas, particularly in the industrial and agricultural sectors. The services industry, which accounts for about 65% of Mexico’s GDP, remained resilient despite challenges.

However, the industrial sector barely grew, registering a meager 0.3% increase for the year. This tepid performance reflects ongoing concerns about potential policy shifts and trade relations with the United States.

The construction industry also faced headwinds as government infrastructure projects wound down. Agriculture took a significant hit in 2024, contracting by 2.5%.

Experts point to climate change impacts and severe drought conditions as major factors behind this decline. This marks the second consecutive year of contraction for the primary sector.

Mexico’s Economic Outlook

The final quarter of 2024 painted a particularly gloomy picture. The economy shrank by 0.6% compared to the previous quarter, its first contraction since late 2021. This decline surprised many analysts who had expected a milder slowdown.

Despite the overall sluggish performance, some bright spots emerged. Private consumption remained relatively strong, especially in the first three quarters. This consumer resilience helped prop up the economy amid weaknesses in other areas.

Looking ahead, economists express mixed views on Mexico‘s prospects for 2025. Some worry about lingering uncertainties, including potential changes in U.S. trade policies and the impact of recent judicial reforms.

Others see opportunities in the “nearshoring” trend, as companies seek to relocate production closer to North American markets. Mexico’s central bank faces a delicate balancing act in the coming year.

It must weigh the need to support economic growth against the ongoing fight against inflation. Any easing of monetary policy could provide a much-needed boost to the economy. As Mexico navigates these economic challenges, businesses will need to adapt.

Policymakers will also have to adjust their strategies accordingly. The country’s ability to attract investment and diversify its economic base may prove crucial in reigniting stronger growth. Only time will tell if 2025 will mark a turning point or a continuation of the current slowdown.