Decline of the Mexican GDP at the End of 2024: Inegi Reports
The Mexican economy was impacted in the fourth quarter of 2024, surpassing expectations, marking its first decline in over three years. This was due to poor performance in agricultural activities and the industrial sector. According to seasonally adjusted preliminary figures released on Thursday by Inegi, the Gross Domestic Product (GDP) experienced a quarterly drop of 0.6%.
Analysts had anticipated a contraction of 0.2%, according to a Reuters survey. This marks the first decline for the second-largest economy in Latin America since it contracted by 0.9% in the third quarter of 2021. The drop was driven by a collapse of 8.9% in primary activities, which cover agriculture, fishing, and mining, as well as a 1.2% decline in secondary activities, including manufacturing. In contrast, tertiary activities, focused on the vast services sector, grew by 0.2%. “Today’s results imply that the IGAE for December fell by about 0.7% month-on-month, following a growth of 0.4% in November,” Banamex noted. Thus, throughout last year, the Mexican economy grew by 1.3% according to seasonally adjusted data. Annually, GDP moderated its growth to 0.6% in the fourth quarter, compared to 1.6% in the previous quarter, a figure that was lower than analysts had expected, who were forecasting an advance of 1.2%. “Projections suggest that economic growth will remain weak; we maintain our estimate of 0.2% growth for GDP in 2025,” Banamex stated. Information from Reuters.
This type of contraction in GDP can indicate unfavorable economic cycles, highlighting the importance of diversifying the economy and strengthening sectors that have shown resilience, such as services. It will be crucial for authorities to implement effective policies to stimulate growth, thereby boosting investment and domestic consumption, which could help mitigate the effects of this decline. A focus on innovation and the adoption of technologies will also be vital to improving productivity and long-term competitiveness.
