Economics: Following the Q2 GDP rebound, a slowdown is expected in the second half of the year

MEXICO - Report 18 Aug 2026 by Mauricio González and Francisco González

Second-quarter 2026 GDP growth surprised to the upside at 2.1% annually, but the strength came almost entirely from volatile or previously depressed components — mining, agriculture, residential construction, wholesale trade, and health services — that are unlikely to sustain their momentum through year-end. Agriculture posted a striking 9.0% rebound after years of stagnation, although it now faces external trade risks tied to avocado, tomato, and beef exports. Mining's recovery merely offsets a fraction of two prior years of steep contraction, hindered by falling oil extraction and regulatory obstacles facing non-precious metals producers. Construction shows conflicting signals across data sources, with non-residential building in decline even as public spending — concentrated in railway projects of limited social value — props up headline figures and residential construction with high volatility.

Manufacturing remains the clearest drag on the economy, weighed down by tariff-driven uncertainty in the automotive and steel industries, weak domestic investment, and an export boom concentrated in data-processing and electronics equipment that relies heavily on imported inputs and therefore adds little real value domestically. Services are also decelerating, as household consumption remains cautious amid weak employment and slow real growth in remittances, dragging down retail, restaurants, and hotels. It is also worth noting that previously dynamic service branches such as professional and scientific, as well as business support and remediation, and transportation and delivery services, are decreasing or growing at a considerably lower pace.

Taken together, these sectoral dynamics lead us to project GDP growth of 1.3% for 2026 and 1.4% for 2027 — well below the government's official range of 1.8% to 2.8%. This implies that per-capita GDP will remain essentially stagnant and continue to fall short of the 2% average growth rate Mexico sustained between 2000 and 2018.

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