Economics: Latest aggregate demand figures reflect contraction in several areas of the Mexican economy

MEXICO - Report 24 Jun 2025 by Mauricio González and Francisco González

Last Wednesday, aggregate demand and supply figures for the first quarter of 2025 were released showing that aggregate demand (equal to supply) contracted an annual -0.1% based on original figures. That slippage came mainly in response to a significant drop in gross fixed capital formation (-6.8%), while consumption was also off, albeit by a much more modest -0.6%, both part of a deceleration trend that got firmly underway in 2024. In contrast, exports registered an annual increase during the quarter of 12.0% in real terms, although April's trade balance figures suggest a deterioration for the second quarter. The behavior of various aggregate demand components reflects stagnation and slight contractions in several areas of the economy.

Private consumption is expected to remain weak for the remainder of the year due to a stagnant labor market and a reduction in remittance inflows, both of which are impacting manufacturing production focused on the domestic market and services provided to households. Likewise, investment in construction will continue to fall in the public sector and remain weak in the private non-residential sector, in an environment of great external uncertainty. These are compounded by the implementation of constitutional reforms at the domestic level, such as the judicial reform, and the disappearance of autonomous agencies, which generate disincentives to long-term investment.

With respect to other indicators released in the past week, it was reported that in April the number of people employed in manufacturing registered an annual decrease of -1.6%. So far in 2025 (January-April), manufacturing employment has fallen -1.2% yoy. These payroll setbacks are due to the fact that manufacturing production has shown modest figures throughout this year: in January-April it registered an annual increase of 0.3%. This in turn has been influenced by lower exports from the automotive sector, a pillar of the industry.

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2025 GlobalSource Partners. All rights reserved. This report is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This report is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this report or its contents.