Mexico economy shrinks in first quarter, but beats bleakest forecasts
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A building undergoing construction is seen in Mexico City, Mexico January 30, 2020. REUTERS/Andres Martinez Casares
By Aida Pelaez-Fernandez
MEXICO CITY, May 22 (Reuters) - Mexico's economy shrank 0.6% in the first quarter from the previous three-month period, data from the national statistics agency INEGI showed on Friday, compared with a 0.8% decline expected by economists in a Reuters poll.
Latin America's second-largest economy pulled back after revised growth of 0.7% in the fourth quarter of 2025.
"The weakness was broad-based across the major sectors, reinforcing the view that the slowdown reflects fading domestic momentum rather than an isolated shock," said Andres Abadia, chief LatAm economist at Pantheon Macroeconomics.
Primary activities, which include farming, fishing and mining, recorded the steepest decline with a fall of 1.7%, according to INEGI's data.
The secondary sector, which includes manufacturing and construction, and tertiary activities, which cover services, were down 1% and 0.4% respectively.
In annual terms, the economy expanded 0.2% compared to a year earlier, slightly above the 0.1% growth expected by economists.
CAUTIOUS OUTLOOK
Analysts have remained cautious on Mexico's economy in 2026, expecting weak momentum to persist amid global uncertainty.
The central bank's decision in early May to cut its benchmark interest rate by 25 basis points to 6.50% was divided, with board members signaling the need for greater caution.
Uncertainty around the impact of the U.S. and Israeli war with Iran and a sluggish economy were the main concerns, according to minutes from the meeting.
Separately on Friday, INEGI reported that Mexico's economic activity grew 0.4% in March from the prior month, beating expectations from economists.
(Reporting by Aida Pelaez-Fernandez and Ricardo Figueroa; Additional reporting by Noe Torres; Editing by Chizu Nomiyama and Emelia Sithole-Matarise)
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