Mexico's economy shrinks amid external pressures

Mexico’s economy contracted in the first quarter, marking another setback for President Claudia Sheinbaum despite her efforts to boost investment and drive growth.

Gross domestic product fell 0.8% in the January-to-March period compared with the previous three months, representing the sharpest quarterly decline since late 2024, News.Az reports, citing Bloomberg.

The figure came in below the -0.6% median estimate from a Bloomberg survey and reversed the 0.9% expansion recorded in the prior quarter, according to preliminary data released Thursday by the national statistics institute.

On an annual basis, GDP showed minimal growth, rising just 0.1% from a year earlier. This was also weaker than expectations of 0.7% and marked a slowdown from the previously revised 1.6% growth rate.

The quarterly downturn was driven primarily by reduced activity in agriculture and manufacturing, while the services sector also posted a decline.

Many economists define a technical recession as two consecutive quarters of negative growth. However, Bank of Mexico does not anticipate such a scenario and projects that GDP will grow 1.4% this year, an improvement from the 0.5% expansion recorded last year. Since Sheinbaum assumed office in late 2024, overall investment growth has weakened significantly, falling from around 2% year-on-year to -6% by the end of last year.

External pressures have also weighed on the economy. Tariffs imposed by U.S. President Donald Trump on Mexican exports have affected trade, while the ongoing conflict in the Middle East has added further strain. The situation could impact Mexico’s economic outlook for 2026, particularly as signs of fragility re-emerge.

Central bank Governor Victoria Rodríguez Ceja told lawmakers during a Senate hearing this week that the conflict could further cloud growth prospects at a time when the economy is already showing renewed weakness.

News.Az 

By Nijat Babayev