Mexico’s economy expanded modestly in the second quarter of 2024 but fell short of market expectations. According to the Instituto Nacional de Estadística y Geografía (INEGI), the country’s GDP grew by 0.2% from the previous quarter, down from the 0.3% growth rate seen in the first quarter.
The primary activities sector experienced a notable decline, with output falling by 1.7% in the second quarter, a stark contrast to the 1.7% increase recorded in the first quarter.
This contraction significantly impacted the overall GDP growth, underscoring the volatility and challenges within Mexico’s agricultural and natural resource sectors.
Tertiary activities, which encompass services and retail, showed a slower growth rate of 0.3% in the second quarter, down from 0.6% in the previous quarter.
The deceleration in this sector, which is a crucial driver of the Mexican economy, raises concerns about consumer spending and business services amid broader economic uncertainties.
In a more positive development, secondary activities, including manufacturing and construction, improved by 0.3% in the second quarter.
This rebound follows two consecutive quarters of decline (-0.5%) and suggests some resilience in Mexico’s industrial base despite the overall economic slowdown.
Despite the quarterly slowdown, Mexico’s GDP increased by 2.2% year-on-year in the second quarter of 2024.
This growth indicates a degree of resilience and highlights the potential for recovery in the face of ongoing economic challenges.
Opportunities for growth
Mexico’s economic outlook is influenced by several external and internal factors.
Externally, economic uncertainties in key trading partners like the United States and global economic volatility affecting investment flows pose significant risks. Domestically, challenges such as inadequate infrastructure, political instability, and the impact of high inflation and rising interest rates on consumer spending and investment could affect GDP performance.
Mexico’s GDP growth has varied compared to other Latin American countries in recent years.
While some nations in the region, like Chile, Colombia, and Peru, have enjoyed more consistent and long-term economic growth due to factors such as economic diversification and favorable investment policies, Mexico has faced significant obstacles.
These include heavy reliance on specific sectors, volatility in oil prices, and structural challenges that have hindered its economic performance.
Mexico’s GDP growth in the second quarter of 2024 highlights the mixed performance across different economic sectors. While secondary activities show promise with a rebound, the significant contractions in primary activities and slower growth in tertiary activities underscore the need for strategic measures to ensure sustainable growth.
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