Mexico’s Economy Grows 0.9% Quarterly, Beating Forecasts Ahead of U.S. Midterm Elections
Key Facts
Mexico’s economy grew 0.9% in the third quarter from the previous quarter, beating the 0.7% forecast in a Reuters poll, but slowing from 1.4% in the second quarter, according to a Reuters report published via Investing.com. On an annual basis, growth reached 3.2%, versus economists’ forecast of 2.5%. The figures mean activity remained stronger than analysts had estimated, despite a slower pace of quarterly expansion. Andres Abadia of Pantheon Macroeconomics said the economy maintained "strong momentum in the third quarter," adding that the recovery had extended beyond the "temporary boost" linked to the World Cup. The data come as investors watch the U.S. midterm elections and the upcoming Bank of Mexico meeting.
Services led quarterly expansion with a 1.1% increase, while industry, including manufacturing and construction, rose 0.8%, according to Reuters. By contrast, primary activities, including agriculture and mining, contracted 0.4%. The breakdown shows services and industry contributing to output growth in the third quarter, while primary activities declined. These details place the overall GDP reading in the context of different sectors of the economy, with quarterly growth slowing from the second quarter. Annual expansion of 3.2% was above economists’ estimate of 2.5%, despite this divergence across sectors.
The Reuters report put the growth data at the center of discussion about the interest-rate path: analysts said strong activity reduces the likelihood of an immediate cut and forecast that the Bank of Mexico’s benchmark rate would remain at 6.50% during the first half of 2027. Abadia said the data reinforced expectations that rates would stay at that level throughout that period. Capital Economics analysts also expected the wording of the bank’s communications at its meeting the following week to be less dovish than in September. This comes as Finance Minister Edgar Amador maintained the ministry’s 2026 economic growth forecast within a range of 1% to 2%. Amador said growth could reach the upper end of the range if current momentum continued.
The dollar-peso pair closed at 18.8521 pesos per dollar on October 31, then fell to 18.562 on November 2, according to EL7 data. The decline in the pair’s rate between the two closes means the dollar bought fewer pesos on November 2. This coincided with the release of third-quarter GDP data, but closing data alone do not establish the reason for the currency move. The sequence does not prove that the growth surprise directly drove the peso; the Reuters report linked stronger output to rate expectations, not to the exchange-rate move that day. The upcoming U.S. midterm elections remained among the events traders were watching.
U.S. voters go to the polls on November 3, 2026, in midterm elections to choose members of the House of Representatives and Senate, as well as governors in some states, according to Reuters; these are not presidential elections. The result will determine control of Congress during the final two years of President Donald Trump’s term. The election is part of the context in which markets are tracking U.S. policy, alongside Mexican activity data and currency moves. In Mexico, the central bank meets the following week, and analysts expect the benchmark rate to remain at 6.50% during the first half of 2027. Capital Economics analysts expect the tone of the bank’s communications to be less dovish than it was in September.