Economics: Third-quarter aggregate demand figures reflect weak private consumption and a deep contraction in fixed investment
On Friday, December 19, the aggregate supply and demand figures for the third quarter of 2025 were released. They show that aggregate demand (equal to supply) grew by 1.0% YoY according to seasonally adjusted figures and accumulated an increase of 0.7% YoY in the first nine months of the year.
The third quarter recorded a significant annual contraction in gross fixed capital formation of -7.6% (-7.1% year-to-date Jan-Sep 2025) and weak consumption growth of 1.3%.
Weak private consumption growth and very low investment levels are expected to persist into the following year, as the factors hindering their progress will not dissipate in the short term.
This analysis examines the recent aggregate demand figures and the growth prospects for its components in the coming year.
Regarding the week's indicators, it was reported that in October 2025, retail sales increased by only 0.4% MoM (seasonally adjusted rate) and rose 3.5% YoY. In contrast, wholesale sales showed negative variations: -1.8% and -0.8%, respectively.
Thus, the deceleration in the growth rate of retail sales continued, although they still showed positive annual and year-to-date (January-October) rates.
On another note, during the week, it was announced that the Mexican Central Bank (Banxico) reduced the interest rate by 25 basis points, bringing it to 7%. It estimates that both headline and core inflation will decrease to 3% by the third quarter of 2026. It is possible that Banxico will lower its interest rate to 6.5% by the end of 2026.
This estimate is more rhetorical than realistic, as inflation is not under its control, especially non-core inflation, which rose to 4.43% in November, the highest rate since March 2024.
Now read on...
Register to sample a report