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Mexico Economy Shrinks in Q3 as October Activity Stalls

A steep industrial downturn is reinforcing expectations of further Banxico rate cuts, stirring peso and equity volatility.

Overview

  • INEGI confirmed a third‑quarter GDP contraction of about 0.3% quarter‑on‑quarter, with the industrial sector driving the decline despite steadier services and a small primary‑sector revision.
  • September’s IGAE fell 0.6% month‑on‑month and 0.6% year‑on‑year, including a 3.3% annual drop in secondary activities, a 4.9% monthly fall in primary output, and a 0.5% slide in services.
  • INEGI’s timely indicator (IOAE) points to zero annual growth in October, with industry down 2.1% year‑on‑year and services up 0.9%, underscoring a lack of rebound into Q4.
  • The peso weakened to roughly 18.48 per dollar and logged a four‑day slide, while Mexican equities swung through a volatile session before the S&P/BMV IPC closed up about 0.33%.
  • Banxico’s November minutes show most officials citing economic weakness as grounds to cut rates, and forecasters widely expect a 25 bp move in December as analysts flag rising risk of a Q4 dip that would meet the threshold for a technical recession.