Mexico’s economy expanded in the first half of 2025, but weak industrial output and job losses could weigh on growth and affect border communities that depend on cross-border trade.

The Federal Reserve Bank of Dallas’ Mexico Economic Update, published last week, shows the country’s economy growing at a modest pace in early 2025, supported by stronger exports and consumer spending. But the report also highlights declines in industrial production and formal employment, along with steady inflation and a recent interest rate cut. The mixed picture points to continued growth, though with risks for border trade, labor markets and investment.

The report said gross domestic product rose at an annualized rate of 1.8% in the first half of the year. Economists now expect 0.5% growth for 2025, up slightly from earlier forecasts.

Industry slows

Mexico’s industrial production slipped this summer, with manufacturing down 0.5% in a three-month average through July. The report noted that lower investment and weaker global demand are pressuring factories.