Mexico’s preliminary second-quarter 2026 GDP rose 1.4% quarter-on-quarter, returning to expansion after a 0.3% first-quarter contraction and coming slightly under INEGI’s 1.5% July flash estimate, with year-on-year growth at 2.1%. The primary sector led with 2.4% quarter-on-quarter growth, services rose 2.4% year-on-year, and industry advanced only 1.5% year-on-year amid weak construction and softer external demand, pointing to a gradual, domestically driven recovery. June GDP slipped 0.1% month-on-month but was up 2.8% year-on-year. Inflation reaccelerated, with first-half August CPI at 3.26% year-on-year and core inflation at 3.93%, still inside Banxico’s 3%±1 point target but persistent enough that the central bank, which held its policy rate at 6.50%, is tilting toward tightening. The softer-than-expected GDP print and firmer prices complicate the policy outlook and leave markets cautiously pricing growth and global trade risks, with the peso relatively stable after the release.