Mexico GDP Grows 0.8% in 2025, Risks Persist for 2026

Mexico’s economy grew 0.8% in 2025, according to INEGI, reflecting structural growth constraints as industrial sectors contracted despite gains in services and agriculture, widening the output gap and weighing on investment and business confidence. Analysts at Goldman Sachs project modest growth of 1.3% in 2026, citing trade uncertainty with the United States, USMCA review risks, limited fiscal support and external vulnerabilities such as remittances, shaping Mexico’s business and investment outlook despite strong international reserves reported by Banco de México.

Mexico’s economy grew 0.8% in 2025 compared with 2024 in real terms and seasonally adjusted figures, according to INEGI. The final GDP data, which incorporates full economic surveys and administrative records, replaced the preliminary estimate of 0.7%.

The result marks four consecutive years of slowing growth since 2021, when economic activity rebounded 6.3%, following the pandemic-driven contraction. Investment strategists, including Carlos Capistrán, Chief Economist for Mexico and Latin America, Bank of America Securities, and Alejandro Saldaña, Chief Economist, Bx+, warned of chronic growth constraints in the Mexican economy. 

Both noted that the 2025 GDP result widens the output gap relative to the country’s estimated growth capacity of 2% and the historical average growth rate of 1.8% recorded between 2000 and 2018.

Services and Agriculture Drive Growth

GDP data for 2025 showed that tertiary and primary activities supported overall economic performance. Service and commerce activities expanded 1.5% during the year, contributing 31.8% to total GDP. Primary activities, including agriculture, livestock and forestry, grew 4% and accounted for 4.5% of total output.

However, these gains did not offset the contraction in secondary activities such as industry, manufacturing and construction, which declined 1.1% between January and December 2025. According to INEGI, secondary activities, including industry, mining and construction, represent 63.3% of total GDP, meaning nearly two-thirds of economic activity contracted during the year.

Economic activity strengthened in 4Q25, with GDP increasing 0.9% compared with 3Q25. Economists at Goldman Sachs and Pantheon Macroeconomics described the fourth-quarter result as a positive signal that could support economic performance in the coming year, though they cautioned that the outlook remains fragile amid uncertainty in 2026.

Andrés Abadía, Chief Economist for Latin America, Pantheon Macroeconomics, said the year-end data “was driven by the lagged effect of lower rates, the rebound of the Mexican peso and the moderation of inflation that compensate for adverse internal and external factors.”

He added that challenges persist, including a gradual recovery in investment, the effects of monetary easing on domestic demand and the selective support expected from transportation, housing and consumption projects linked to the FIFA World Cup.

Alberto Ramos, Economist, Goldman Sachs, said economic activity is expected to face difficulties due to weak business confidence and the peak of the credit cycle. He also projected that investment will remain affected by domestic and external uncertainty, particularly related to US trade policy direction and the review of the USMCA. 

Despite the late-year momentum, analysts said structural constraints and weak industrial performance continue to weigh on Mexico’s growth outlook.

2026 Outlook

Mexico’s economic outlook for 2026 shows modest improvement, although structural and external challenges continue to constrain growth. Estimates from global investment bank Goldman Sachs indicate that the country’s GDP is expected to expand by 1.3% next year.

If realized, this would represent an acceleration from the estimated 0.3% growth recorded in 2025. Even so, Goldman Sachs economists caution that Mexico is likely to underperform against the regional average for a second consecutive year. In its annual report, Latin America Economic Outlook 2026, titled Stuck Again in Modest Performance, the firm forecasts regional growth of 1.9%, highlighting Mexico’s comparatively weaker momentum.