Mexico's Q2 GDP Growth Hits Fastest Pace Since 2022

Mexico's economy posted its strongest quarterly expansion in over three years during the April-June period, according to data released by the national statistics agency INEGI. Latin America's second-largest economy grew 1.4% from the previous quarter, rebounding from a revised 0.3% contraction in the first three months of the year.

All three major sectors tracked by INEGI recorded growth in the quarter. Primary activities — encompassing farming, fishing, and mining — led the expansion with a 2.4% increase. The overall figure came in slightly below INEGI's preliminary estimate of 1.5% published last month.

On an annual basis, the economy expanded 2.1% in the second quarter. A separate INEGI report showed that in June alone, economic activity dipped 0.1% month-on-month but registered a 2.8% increase compared with June of the previous year.

Meanwhile, inflation is showing signs of persistence. Mexico's 12-month inflation rate accelerated to 3.26% in early August, up from 3.10% a month earlier. While this remains within the Bank of Mexico's target range of 3% plus or minus one percentage point, the combination of rising prices and stronger economic activity is tilting expectations toward a potential rate hike.

The central bank, known as Banxico, held its benchmark interest rate at 6.5% earlier this month. Minutes from that meeting indicated policymakers were inclined to keep rates unchanged for an extended period. However, the core price index, which excludes volatile food and energy prices, rose 3.93% year-on-year through early August and climbed 0.08% compared with the first half of July, underscoring the persistence of underlying price pressures.