Mexico’s economy showed signs of fragility as 2024 ended, according to data from the National Institute of Statistics and Geography (Inegi).
The institute’s Timely Indicator of Private Consumption (IOCP), released on Friday, revealed a 0.5% contraction in household spending on goods and services. This decline occurred in December.
This marked the seventh monthly decline of the year, albeit not consecutive, and highlighted weaker-than-expected economic activity. The December contraction led to private consumption growing only 0.5% year-over-year.
This marks a stark slowdown compared to the 4.2% growth rate recorded in December 2023. Despite this, the IOCP suggests a slight recovery in January 2025, with an estimated 0.1% monthly increase and a 1.9% annual growth rate, aided by a low comparison base.
These figures underscore a more subdued performance than Inegi had anticipated earlier in January when it projected a modest 0.1% growth for December. The IOCP provides an experimental econometric estimate of private consumption trends roughly two weeks after the reference month.
Mexico’s Private Consumption Struggles
It offers quicker but less precise insights compared to the Monthly Indicator of Private Consumption (IMCP), which is released nine weeks later. The final IMCP data for December will be published on March 5, providing a clearer picture of private consumption trends at the end of 2024.
This weakness in consumer spending aligns with Inegi’s preliminary estimate for Mexico’s GDP in the fourth quarter of 2024. Released on January 30, the estimate showed a quarterly contraction of 0.6%.
This marked the first decline since the third quarter of 2021, when GDP fell by 0.9%. The latest data highlights challenges for Mexico’s economy as it grapples with slowing domestic demand.
While January may bring marginal improvement, the broader trend indicates that consumer spending remains under pressure. This is a key factor, as consumer spending is an essential driver of economic growth heading into 2025.