Mexico's economic activity recorded a monthly contraction, mainly driven by the weakness in the manufacturing sector, which continues to be affected by the slowdown in external demand, especially from the United States. Felipe Mendoza, an analyst from EBC Financial Group, pointed out that the situation is aggravated by Mexico's high dependence on its export sector, particularly in the automotive industry, where both production and exports have shown significant declines. However, Felipe Mendoza noted that not all the news is negative. Domestic consumption has shown some resilience, with solid retail sales growth at the beginning of the year, demonstrating that despite restrictive financing conditions, domestic demand still supports part of the growth. "This behavior creates an interesting dichotomy: while the external sector weakens, the domestic market acts as a partial cushion for the slowdown," the specialist emphasized. Banxico cuts interest rate. The market analyst highlighted that one of the most relevant events of the month was the decision by the Bank of Mexico (Banxico) that surprised the markets by cutting the interest rate by 25 basis points, bringing it to 6.75%. "This decision comes in a contradictory context where, on one hand, inflation remains above the target range, reaching levels close to 4.63%, while on the other, economic activity shows signs of weakness that justify a less restrictive stance." Despite the recent rebound in inflation, medium-term expectations point to a convergence towards the 3% target set by Banxico, although this process could extend until 2027, the analyst concluded. The blow comes from two sides: less activity and decisions that raise red flags. The data confirms it. Economic activity registered a monthly contraction, dragged down by the weakness in manufacturing and the drop in exports, especially in the automotive industry, warned a special report by EBC Financial Group market analyst Felipe Mendoza. At the same time, he pointed out, the Bank of Mexico (Banxico) surprised the markets and investors by cutting its interest rate to 6.75%, even as inflation remains near 4.63%, above the 3% target plus a one percentage point tolerance range. "The Mexican economy has been marked by a complex environment where internal slowdown factors, key monetary policy decisions, and a geopolitical scenario that has increased global uncertainty converge," Felipe Mendoza stressed. Mexican economy cools down. The EBC Financial Group analyst highlighted that in March 2026, the available data showed that the economy is beginning to show clear signs of cooling. Money yields less, work feels slower, and opportunities start to cool. It's not perception: the Mexican economy already showed clear signs of a drop in March.
