Mexican Economy Faces Widespread Stagnation: IMEF Indicators Reveal Slowdown

The Mexican economy has entered a period of widespread stagnation, according to recent data from the Mexican Institute of Finance Executives (IMEF).

Their monthly indicators paint a concerning picture of economic slowdown across multiple sectors. September saw the IMEF Manufacturing Indicator rise by 0.9 points to 49.5 units compared to August.

Despite this slight increase, the indicator has remained in contraction territory for six consecutive months. The IMEF indicator uses a scale of 0 to 100, with 50 marking the threshold between expansion and contraction.

The Non-Manufacturing Indicator, which covers commerce and services, dropped 0.7 points to 49.4 units in September. This marks the first time since January 2022 that this indicator has fallen into contraction territory.

Both trend-cycle and company-size-adjusted indicators registered at 49.6 units, just below the expansion threshold. IMEF experts note that these indicators have been showing consistent declines in recent months.

This trend hinted at a deceleration in growth for the services and commerce sectors. The September data may signal the beginning of a contraction in these sectors.

Mexico’s Economic Outlook

The weak growth pattern observed in the first two quarters of the year appears to be extending into the third quarter.

This development raises concerns about the overall health of the Mexican economy as it approaches the end of the year.

Globally, production growth has shown resilience while inflation has moderated. G20 countries have experienced relatively solid growth this year. Recent indicators suggest this momentum continues, especially in the service sector.

The Organization for Economic Cooperation and Development (OECD) projects growth rates of 2.6% in 2024 and 1.6% in 2025 for the United States.

As inflation eases and labor market pressures decrease, further monetary policy rate cuts are expected worldwide, with some exceptions. For Mexico, growth estimates have been consistently revised downward.

The OECD reduced its projection by 80 basis points for both 2024 (1.4%) and 2025 (1.2%). These figures underscore the challenges facing the Mexican economy in the coming years.