Mexico’s Economy Grows 1.8% in January, Reflecting a Fragile Recovery

Mexico’s economy grew 1.8% in January 2025 compared to the same month in 2024. This data comes from preliminary reports by the National Institute of Statistics and Geography (INEGI).

This modest increase signals a fragile recovery following a challenging 2024, when annual GDP growth slowed to 1.3% from 3.2% in 2023. Month-over-month, economic activity rose just 0.1% compared to December 2024, underscoring the slow pace of improvement.

The data comes from the Indicador Oportuno de la Actividad Económica (IOAE), which provides early estimates of economic performance ahead of the more detailed Índice Global de la Actividad Económica (IGAE).

The figures highlight uneven growth across sectors. Manufacturing and industrial activity remain constrained by weaker demand from the United States, Mexico’s largest trading partner.

Meanwhile, services, supported by private consumption, have shown resilience. Consumer spending rose 2.7% month-over-month in January, driven by increased demand for goods and services such as food and tourism.

Inflationary pressures have eased significantly, offering some relief to businesses and households. Annual inflation fell to 3.59% in January, its lowest level in four years and within the central bank’s target range of 2%-4%.

However, core inflation edged up slightly to 3.66%, indicating persistent price pressures that could complicate monetary policy decisions. Despite these developments, growth forecasts for 2025 remain cautious.

Citi recently lowered its GDP growth projection for Mexico to 1%, citing risks such as slowing U.S. industrial production, fiscal tightening, and political uncertainty following the June 2024 elections.

While nearshoring trends present long-term opportunities for manufacturing and logistics, their immediate impact remains limited. This data underscores the delicate balance policymakers must strike between fostering growth and maintaining stability as Mexico navigates ongoing domestic and global challenges.