Overcoming a disappointing first quarter, Mexico is now one of the OECD’s top-growing economies

Mexico's economy demonstrated remarkable growth in the second quarter of the year, surging three times faster than the Organization for Economic Co-operation and Development (OECD) average, according to preliminary figures released by the OECD. In Q2, Mexico's economy expanded by 1.4%, significantly outpacing the OECD's 0.5% growth rate, which had already increased from the 0.4% rate in the first quarter.

The primary activities sector, including farming, fishing, and mining, played a crucial role in Mexico's robust expansion, driving the economy ahead of competitors like Brazil, which only managed a 0.2% growth rate during the same period.

The OECD data highlighted that 27 member states experienced growth during the second quarter, with Ireland leading the pack at 3.9% followed by Israel at 3.6%. Switzerland, Slovenia, Lithuania, and Mexico rounded out the top five, while Austria, Belgium, and Chile reported no change in GDP. However, several G7 members, including Germany, Italy, Japan, the United Kingdom, and the United States, witnessed a slowdown, with the G7's overall GDP growth contracting to 0.3% in Q2, down from 0.4% in Q1.

While Mexico's economic rebound was impressive, it was slightly lower than the INEGI's earlier estimate of 1.5%. The country's economic recovery came after a revised 0.3% contraction in the first quarter. The OECD attributed the G7 slowdown to weak export growth, a declining livestock industry, and reduced retail consumption. In contrast, Mexico's economy rebounded from its first-quarter contraction, marking its strongest expansion since early 2022.

However, Mexico still faces challenges, most notably persistent inflation, which reached 3.26% in early August, slightly above the Bank of Mexico's target range of 3% plus or minus one percentage point. This could potentially lead to a rate hike, despite recent cautious remarks from the bank.