Mexico’s latest Gross Domestic Product (GDP) year-on-year (YoY) figure, released on November 21, 2025, shows a contraction of -0.10%, a slight improvement from the -0.20% forecast and the previous month’s flat reading. This data, sourced from the Sigmanomics database, reflects ongoing economic challenges amid a complex global and domestic environment.

Geographic & Temporal Scope

The GDP figure covers the Mexican economy’s performance over the past 12 months, capturing the period from late 2024 through late 2025. This timeframe includes the impact of global inflationary pressures, tightening monetary policies worldwide, and regional trade dynamics. Mexico’s economy, heavily integrated with the US and Latin American markets, remains sensitive to external demand and commodity price fluctuations.

Core Macroeconomic Indicators

• GDP YoY: -0.10% (Nov 2025), improving from -0.20% estimate and 0.00% prior.
• Inflation rate (latest): 5.10%, above the central bank’s 3% target.
• Unemployment rate: 3.90%, stable but with sectoral disparities.
• Manufacturing PMI: 49.80, indicating slight contraction.
• Current account balance: -1.20% of GDP, reflecting trade deficits.
• Exchange rate (MXN/USD): 18.75, depreciated 1.30% over the past month.

Mexico’s GDP contraction contrasts with the modest growth of 1.20% YoY recorded in the same period last year. The economy’s stagnation reflects a combination of subdued domestic demand and external headwinds. The manufacturing sector, a key growth driver, has slowed, while services show resilience but limited expansion.

Monetary Policy & Financial Conditions

The Bank of Mexico (Banxico) has maintained a restrictive stance, keeping the benchmark interest rate at 11.25% to combat inflationary pressures. Real interest rates remain positive, tightening credit conditions. The central bank’s inflation target of 3% remains elusive, with core inflation sticky above 5%. Financial conditions have tightened, reflected in higher borrowing costs and cautious lending.

Fiscal Policy & Government Budget

Fiscal consolidation efforts continue, with the government aiming to reduce the budget deficit from 3.50% of GDP in 2024 to 2.80% in 2025. Public investment has been restrained, focusing on infrastructure projects with long-term payoffs. Social spending remains stable but under pressure from rising inflation and currency depreciation.

Historical comparisons highlight that Mexico last experienced a similar mild contraction in early 2023, when GDP dipped -0.15% YoY amid global supply chain disruptions. The current print is better than the -0.40% contraction seen in mid-2024 but worse than the 1.20% growth recorded in late 2023. This pattern suggests a volatile but gradually improving trajectory.

Market lens

Immediate reaction: The MXN/USD currency pair depreciated 0.50% within the first hour post-release, reflecting investor caution. The 2-year government bond yield edged up 5 basis points, signaling slightly higher risk premiums. Breakeven inflation rates remained stable, indicating unchanged inflation expectations.

Looking ahead, Mexico’s growth prospects hinge on several factors, including global demand, domestic policy adjustments, and structural reforms. The following scenarios outline potential trajectories:

Scenario Analysis

• Bullish (40% probability): Global demand recovers, US-Mexico trade strengthens, and Banxico eases monetary policy by mid-2026. GDP growth rebounds to 1.50% YoY.
• Base (35% probability): Continued moderate external demand and stable but tight monetary conditions keep GDP near zero growth, with slight positive momentum (0.30%).
• Bearish (25% probability): External shocks (e.g., US recession), fiscal tightening, and inflation persistence deepen contraction to -0.50% YoY.

Structural & Long-Run Trends

Mexico’s long-term growth depends on diversifying exports, improving productivity, and enhancing labor market flexibility. Recent reforms in energy and digital infrastructure offer promise but require time to impact GDP significantly. Demographic shifts and urbanization trends also shape future potential.

Mexico’s latest GDP YoY contraction of -0.10% reflects a fragile economy navigating multiple headwinds. While the slight improvement from last month offers hope, risks remain elevated. Monetary policy remains tight, fiscal discipline continues, and external uncertainties persist. Financial markets’ muted reaction suggests tempered expectations. Policymakers must balance inflation control with growth support to avoid prolonged stagnation.

Continued monitoring of inflation trends, credit conditions, and external demand will be critical. Structural reforms and targeted fiscal stimulus could unlock growth potential. Investors should watch for signals from Banxico and trade partners for clearer direction.

Key Markets Likely to React to Gross Domestic Product YoY

Mexico’s GDP figures influence a range of markets, from currency pairs to equities and bonds. The following tradable symbols historically correlate with Mexico’s economic performance and provide insight into market sentiment and risk appetite.

• MXNUSD: The Mexican peso’s exchange rate against the US dollar is highly sensitive to GDP changes, reflecting investor confidence and capital flows.
• GMEXICOB: A major Mexican equity index ETF, tracking domestic corporate earnings and economic activity.
• WALMEX: Walmart de México, a retail giant whose sales correlate with consumer spending and GDP trends.
• USDMXN: The inverse of MXNUSD, often used by traders to hedge or speculate on peso movements.
• BTCUSD: Bitcoin’s price can reflect risk sentiment shifts linked to macroeconomic data releases, including GDP.

FAQs

What does Mexico’s GDP YoY figure indicate?

The GDP YoY figure measures the annual growth rate of Mexico’s economy, signaling expansion or contraction over 12 months.

How does GDP affect the Mexican peso?

Stronger GDP growth typically boosts investor confidence, leading to peso appreciation; contractions often cause depreciation.

Why is the GDP contraction concerning for Mexico?

A contraction signals economic weakness, potentially leading to lower employment, investment, and government revenues.

Takeaway: Mexico’s slight GDP contraction amid tight monetary policy and external pressures calls for cautious optimism. Structural reforms and external demand recovery are vital for a sustained rebound.

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

Updated 11/21/25