(Feb 23): Mexico’s economy slowed for a fourth consecutive year in 2025, as the country struggles to attract more investment and faces down both a large budget deficit and grinding trade uncertainty.
Official data showed gross domestic product in Latin America’s second-biggest economy rose 0.6% in 2025, compared to the previous year. The current economic slowdown is the longest for the country since at least the 1980s.
Gross domestic product rose 0.9% in the fourth quarter compared to the prior three months, coming in slightly above the preliminary 0.8% reading reported in late January. From a year ago, GDP climbed 1.8%, according to final data published on Monday, slightly above the 1.6% expansion in the initial print.
President Claudia Sheinbaum sometimes minimises the importance of faster economic growth in public, though a growing concern for the leftist leader is her flagship Plan Mexico investment blueprint, which has so far failed to deliver.
The local economic slump is largely blamed on a lack of fresh investment, both private and public, with mostly negative figures since late 2024. Both the recent visit of over 370 Canadian business leaders and an ambitious government plan to lure more companies, especially from the energy sector, have not yet yielded any major commitments for new money.
See also: EU set to freeze US trade deal approval over Trump tariff risk
The current consensus among Mexico watchers is for a slight rebound in annual output this year as the economy faces down a variety of headwinds. Still, as trade and fiscal issues continue to cloud the outlook, the Sunday killing of one Mexico’s most powerful cartel bosses has added new and more immediate layers of risk to the economy, wrote Marco Oviedo, senior strategist at XP Investimentos, in a note to clients.
“The relevance for economics is the potential increase in violence that can occur derived from his killing, as it has been the case with other drug leaders in the past,” he said. “This could affect economic activity in the near future, having a toll in retail, trade and investment.”
‘Not representative’
See also: China monitoring Trump’s new trade moves after US court defeat
Along with cartel violence, trade and investment uncertainty, Sheinbaum’s administration is also seeking to address a budget deficit that hit a decades high of nearly 5% in 2024 that only edged down to 4.3% last year. Credit rating companies insist the government needs to close the gap to avoid a potentially costly downgrade.
Sheinbaum’s top trade officials are also preparing for the high-stakes review of the US-Mexico-Canada Agreement in July. US President Donald Trump has at times cast doubts on extending the trade pact he negotiated in his first term, while he privately considers exiting the deal entirely.
Last year’s lacklustre GDP data follows the central bank’s Feb 5 decision to hold its benchmark interest rate steady at 7%, ending a nearly two-year cycle of steady cuts. While the bank has signalled that it expects investment to remain weak until at least the second half of this year, it still expects faster economic growth this year than in 2025.
Alberto Ramos, chief Latin America economist at Goldman Sachs Group Inc, highlighted the fact that Mexico’s economic activity ended 2025 in a positive note, although it’s still not completely out of trouble.
“The strong fourth quarter figure is not representative of the underlying health of the economy,” he said.
Uploaded by Felyx Teoh
