Mexico’s economic activity is projected to grow by 2.5% year-on-year in August, following a 2.8% increase in July. This marks the first time since late 2023 that the economy has expanded at rates above 2% for two consecutive months.
According to the Inegi’s Timely Indicator of Economic Activity (IOAE), the industrial sector grew by 2.7% annually in August, up from 2.4% in July, marking its strongest performance since October 2023. The services sector is expected to grow by 2.6%, down from 2.9% in July, but remains the primary driver of economic growth.
Economic growth moderates in August
Monthly IOAE figures show economic activity growth slowed from 0.6% in July to 0.1% in August. Secondary sector growth decelerated from 0.5% to 0.2%, while tertiary sector growth dropped from 0.6% to 0.1%.
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Sergio Luna, chief economist at Banca Mifel, noted that Inegi figures indicate slightly higher activity in the third quarter but do not signal a robust recovery. He expects the annual economic growth rate to exceed 1%, an improvement over last year but still insufficient. “This economy follows without growing as much as we would like,” he said.
Andrés Abadía, chief Latin America economist at Pantheon Macroeconomics, emphasized that a single data point does not alter the underlying story of an economy lacking solid growth. He highlighted persistent weaknesses in investment, modest retail sales performance, and a labor market showing signs of fatigue.
Challenges persist despite positive signs
Abadía suggested the economy needs relief through interest rate cuts, but inflationary pressures continue to hinder this measure. Alejandro Saldaña, chief economist at Ve por Más, pointed out that positive figures for July and August could recover losses from May and June but do not represent a turning point for Mexico’s economy, which remains constrained by low growth due to uncertainty, infrastructure limitations, low investment, and reduced productivity.
James Salazar, deputy director of economic analysis at Kapital Grupo Financiero, highlighted the upward revision of July’s figure from 0.1% to 0.6% month-on-month, indicating a stronger start to the second half of the year. However, maintaining this pace will be challenging, and this broad-based expansion sets a floor for GDP growth of around 1.4% to 1.5% in 2026.
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Enrique Covarrubias, chief economist at Actinver, expects economic activity to maintain moderate growth in the second half of the year, supported by consumption and a gradual recovery in investment. He maintains a GDP growth forecast of 1.2% for 2026.
Future growth depends on key sectors
They still project GDP growth of 1.4% for 2026.
Analysts at Monex stated that the evolution of economic activity will continue to depend on the industrial sector’s performance, the strength of services, and domestic demand behavior, particularly consumption and investment. They noted that investment remains constrained by uncertainty related to the trade environment and the USMCA review, which will remain relevant for growth prospects toward the end of the year.
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