The national statistics agency INEGI on Friday confirmed that Mexico’s economy contracted during the first quarter of the year, but not as much as the preliminary data had suggested.
Even so, GDP registered its biggest drop since the fourth quarter of 2014, shrinking 0.6% in the January-March period compared to the previous three months. It was also the worst first quarter since 2020, when the onset of the Covid-19 pandemic caused the economy to shrink by 1.2%.
The first-quarter contraction revived concerns about a possible technical recession, a scenario defined as two consecutive quarters of negative growth in real GDP.
The decline in GDP overshadows the 0.7% recovery observed in 4Q 2025, which provided a slight bump at the end of a sluggish year.
“The weakness was broad-based across major sectors, reinforcing the view that the slowdown reflects fading domestic momentum rather than an isolated shock,” Andrés Abadía, chief economist for Latin America at Pantheon Macroeconomics, told reporters.
The quarterly downturn affected all three economic activities. The primary sector, which includes agriculture, fishing, mining and similar activities, recorded the steepest decline (–1.7%).
The secondary sector (manufacturing and construction) and tertiary activities (services) were down 1% and 0.4%, respectively.
In year-on-year terms, however, the economy outpaced the performance of the first three months of 2025, growing comparatively by 0.4% in 1Q 2026.
On the other hand, since President Claudia Sheinbaum took office in late 2024, aggregate investment growth has fallen from about 2% year-on-year to –6% by the end of 2025.
Despite these numbers and a challenging environment that includes the ongoing review of the US-Mexico-Canada trade pact and warnings from ratings agencies, the government maintains a growth estimate of between 1.8%-2.8% this year. This forecast relies heavily on a boost from domestic demand, the World Cup and the federal Infrastructure Plan.
The central bank (Banxico) expressed concern about the slowdown in Latin America’s second-largest economy, noting earlier this month that the first-quarter contraction would be significantly larger, cautioning that any eventual rebound would be moderate.
The newspaper El Financiero said Banxico is expected to lower its GDP forecast when it publishes its next quarterly report on May 27.
With reports from El Financiero, El Economista, Reuters and Bloomberg News
