Drought and lower industrial activity in the US stopped the economy in Mexico

The Mexican economy decelerated its growth in 2024 and reported a particular contraction in the last quarter of the year, weighed by lower activity in the agricultural sector, the result of a year marked by drought and storms, as well as by the decrease in US demand Of manufactured products, it established official information released yesterday.

In the fourth quarter of 2024, the Gross Domestic Product (GDP) contracted 0.6 percent compared to the level reached in the period from July to September prior, the National Institute of Statistics and Geography (INEGI) reported. It was the first negative quarterly variation since 2021, when the effects of pandemic were resent. Regarding the fourth quarter of 2023, it reported an advance of 0.6 percent, when in the third quarter the annual variation was 1.6 percent.

Thus, the economy had a growth of 1.5 in 2024, in original figures, less than half of 3.3 percent registered in 2023, the INEGI added, reporting the timely estimate of the variation of GDP. With seasonality adjusted figures, because 2024 was leap, the annual growth was 1.3 percent during the past year.

The contraction of 0.6 percent in the fourth quarter does not reflect a generalized weakness of the economy, but specific clashessaid Édgar Amador Zamora, Undersecretary of Finance.

Primary activities, which include agricultural, silvícola and fishing sectors, fell 8.9 percent in October-December compared to the third quarter, according to INEGI data.

The performance of primary activities explains half of the contraction of quarterly GDP and registered their worst fall since 1999, mainly affected by productive factorslike the drought that affected much of the national territory, said Amador Zamora.

Secondary activities, which include manufacturing and construction industries, contracted in the fourth quarter 1.2 percent, according to the INEGI. This sector contributes almost a third of total GDP.

The behavior of secondary activities explains the other half of the contraction of the quarterly GDPsaid the Undersecretary of Finance. “Hurricanes Milton y Helene –That the United States hit in September and October, with categories 5 and 4, respectively – as well as the Boeing Workers strike in that country, they impacted US manufacturing, especially the transport equipment sector, and this was transferred to Mexico, significantly affecting production, ”he added.

The main connection of the Mexican economy with the American is through the manufacturing sector.

The economy continues to resilience in other sectors, highlighting the temporality of these specific clashesthe official said.

Inegi said that tertiary activities, referring to services and trade, only grew 0.2 percent quarterly during October-December 2024.

In its annual measurement, the primary and secondary sector retreated 4.6 and 1.7 percent compared to the fourth quarter of 2023; while the tertiary advanced 2.2 percent.

For Alejandro Saldaña, chief economist of BX+, there are no catalysts that allow economic activity to accelerate significantly for 2025. The institutional framework and the return of Donald Trump to the White House increase the uncertainty about the panorama.

The final GDP data will be published by INEGI on February 21.