The latest data from the Sigmanomics database reveals a robust 1.40% quarter-on-quarter increase in Mexico’s aggregate demand for Q3 2025. This figure notably exceeds the consensus estimate of 0.70% and reverses the prior quarter’s contraction of -1.10%. Over the past two years, aggregate demand has fluctuated between -1.10% and 1.80%, reflecting Mexico’s sensitivity to global trade cycles and domestic policy shifts.

Drivers this month

• Private consumption surged by 1.10%, driven by wage growth and improved labor market conditions.
• Fixed investment rose 1.60%, supported by infrastructure projects and manufacturing expansion.
• Government spending contributed 0.30%, reflecting ongoing fiscal stimulus measures.

Policy pulse

The Bank of Mexico’s benchmark rate remains at 11.25%, maintaining a tight monetary stance to anchor inflation near the 3% target. The aggregate demand rebound suggests some easing of financial conditions, but inflationary pressures persist, limiting the scope for rate cuts in the near term.

Market lens

Immediate reaction: The Mexican peso (MXNUSD) strengthened 0.40% within the first hour post-release, while 2-year government bond yields declined 8 basis points, signaling improved risk sentiment.

Core macroeconomic indicators provide context for the aggregate demand surge. Mexico’s unemployment rate edged down to 3.90% in August 2025, the lowest since 2022. Inflation remains elevated at 5.10% YoY but shows signs of moderation from last quarter’s 5.60%. Retail sales grew 1.30% MoM in August, supporting consumption trends.

Monetary Policy & Financial Conditions

The central bank’s restrictive policy stance has stabilized inflation expectations. Credit growth accelerated modestly to 4.20% YoY, reflecting improved lending conditions. The real policy rate stands near 7%, balancing growth and price stability.

Fiscal Policy & Government Budget

Fiscal policy remains expansionary, with a 2.50% of GDP deficit target for 2025. Increased public investment in infrastructure and social programs underpins demand. However, rising debt-to-GDP ratio at 52% warrants caution.

External Shocks & Geopolitical Risks

Global supply chain disruptions have eased, but trade tensions with the US and China persist. Oil price volatility and geopolitical uncertainties in Latin America pose downside risks to Mexico’s export-driven economy.

Comparing the current print with historical data, the 1.40% growth is the highest since mid-2024’s 1.50%, reversing the downward trend seen in late 2024 and early 2025. The volatility reflects Mexico’s exposure to external demand shocks and domestic policy adjustments.

Market lens

Immediate reaction: The MXNUSD currency pair rallied 0.40%, while 2-year yields dropped 8 basis points, reflecting improved investor confidence. Breakeven inflation rates edged down slightly, indicating tempered inflation expectations.

Looking ahead, Mexico’s aggregate demand trajectory faces mixed prospects. The base case scenario (60% probability) projects moderate growth of 1.00% QoQ in Q4 2025, supported by stable consumption and investment. A bullish scenario (20%) envisions a 1.80% surge if fiscal stimulus intensifies and external demand strengthens. Conversely, a bearish scenario (20%) risks a contraction of -0.50% if inflation spikes or geopolitical tensions escalate.

Structural & Long-Run Trends

Mexico’s long-term growth hinges on productivity gains, diversification, and trade integration. Structural reforms in labor markets and energy sectors could enhance potential output. However, demographic shifts and global competition remain challenges.

Risks & Opportunities

• Upside: Strong remittances, nearshoring trends, and infrastructure investments.
• Downside: Inflation persistence, fiscal constraints, and external shocks.
• Neutral: Gradual monetary policy normalization balancing growth and inflation.

Mexico’s 1.40% QoQ aggregate demand growth in September 2025 signals a meaningful rebound from last quarter’s contraction. Supported by consumption, investment, and fiscal stimulus, the economy shows resilience amid global uncertainties. However, inflationary pressures and geopolitical risks require vigilance. Policymakers face the delicate task of sustaining growth while containing inflation. Financial markets have responded positively, reflecting cautious optimism. The coming quarters will test Mexico’s ability to convert this momentum into durable expansion.

Key Markets Likely to React to Aggregate Demand QoQ

Mexico’s aggregate demand data historically influences currency, bond, and equity markets. The following tradable symbols have shown strong correlations with Mexico’s economic momentum and will likely react to future releases:

• MXNUSD – The Mexican peso against the US dollar typically strengthens on positive demand data.
• MEXBOL – Mexico’s main stock index often rallies with stronger domestic demand.
• GMEXICOB.MX – A key Mexican equity sensitive to economic cycles.
• BTCUSD – Bitcoin’s price sometimes reflects risk sentiment shifts linked to emerging market data.
• USDMXN – The inverse of MXNUSD, useful for hedging currency exposure.

FAQs

What is Mexico’s Aggregate Demand QoQ?

It measures the total demand for goods and services in Mexico, quarter over quarter, indicating economic momentum.

How does Aggregate Demand affect Mexico’s economy?

Higher aggregate demand signals growth, boosting employment, investment, and fiscal revenues, while low demand may signal recession risks.

Why is the September 2025 reading significant?

The 1.40% growth reverses a prior contraction, suggesting a recovery phase amid complex global and domestic conditions.

Key takeaway: Mexico’s aggregate demand rebound in Q3 2025 offers a hopeful growth signal but requires balanced policy to sustain momentum amid inflation and external risks.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.

Last updated: Aug 29, 2025

Sources

1. Sigmanomics database, Aggregate Demand QoQ for Mexico, September 2025 release.
2. Bank of Mexico Monetary Policy Reports, August 2025.
3. INEGI, Mexico Economic Indicators, August 2025.
4. International Monetary Fund, World Economic Outlook, July 2025.
5. Reuters, Mexico Macroeconomic News, September 2025.