Mexico's economy regained its growth trajectory by the end of 2025. The latest "timely estimate" from Mexico's National Institute of Statistics and Geography (INEGI) shows that the Gross Domestic Product (GDP) in the fourth quarter of 2025 grew by 0.8% quarter-on-quarter after seasonal adjustments and 1.6% year-on-year. This recovery reversed the previous quarter's decline, easing market concerns about a "technical recession."
Key Data Points: Quarter-on-Quarter Rebound, Reading Slightly Stronger Than Expected
The seasonally adjusted data released by INEGI indicates that the GDP in the fourth quarter grew by 0.8% compared to the previous quarter and by 1.6% year-on-year. Market expectations leaned towards a moderate recovery, so this result was interpreted as a "better-than-expected rebound" post-announcement.
According to unadjusted figures, INEGI suggests that the annual growth rate for 2025 was approximately 0.5%; with seasonal adjustments, the annual growth rate is around 0.7%. Both metrics point to a pattern of "low growth without a stall."
Sector Breakdown: Services Recovery, More Notable Agriculture Contribution
In terms of structure, both the secondary and tertiary sectors (industry and services) achieved approximately 0.9% growth quarter-on-quarter in the fourth quarter after seasonal adjustments; the primary sector experienced a quarter-on-quarter decline. Year-on-year, the primary sector showed a significant increase, while the tertiary sector remained relatively stable, and the secondary sector saw moderate growth.
In other words, this "bottoming out and rising" is driven more by the resilience of the service side combined with partial sector recoveries, while the agricultural sector displayed a more impressive year-on-year performance, but the industrial sector did not show strong expansion.
Why This Matters: Pressure of Technical Recession Eases, but Growth Momentum Yet to Be Confirmed
Given the contraction in the previous quarter, there was market concern about a "technical recession" scenario with two consecutive quarters of negative growth. The quarter-on-quarter recovery in the fourth quarter has temporarily pushed this risk aside, with investors now focusing on whether the recovery can continue and whether volatility will recur.
It's also important to note that INEGI's "timely estimate" fundamentally offers a preliminary short-term assessment, and as more comprehensive statistical information becomes available, the data may still be revised.
Market and Policy Perspective: Interest Rate Cycle Enters More Cautious Phase
Against the backdrop of macroeconomic stabilization, the path of monetary policy is drawing more attention. In December last year, Mexico's central bank, Banxico, lowered the benchmark interest rate to 7.00%, and the meeting minutes indicated a "cautious and watchful" stance on further rate cuts in 2026, emphasizing that inflation and policy uncertainties still need assessment.
For the market, the more crucial variables ahead may include whether the recovery in the service sector can offset industrial weakness, whether external demand and exchange rate conditions remain favorable, and whether inflation falling can create room for further policy easing.
