Mexico's economy grew 3.2% in the third quarter from a year earlier, according to a preliminary estimate from the national statistics agency INEGI published Friday. Banamex said it was the largest annual expansion in 12 quarters. Output rose 0.9% from the second quarter on a seasonally adjusted basis, ahead of the 0.7% median forecast in a Reuters poll of economists, Mexico News Daily reported.

For investors in Asia, Mexico is both a rival and a customer. It competes with China and Southeast Asia for factory investment aimed at the U.S. market, and it has become a harder place to sell into: since Jan. 1, Mexico has charged import duties of 5% to 50% on more than 1,400 product categories from countries without trade deals. The firmer growth data land as Asian exporters look for ways around those tariffs, and India took a formal step in that direction last week.

Mexico's GDP beats expectations

The quarterly gain was slower than the 1.4% expansion in the second quarter but marked the third straight quarter of growth, according to Expansión's report on the INEGI figures. Annual growth was well above the 2.5% economists had expected, Mexico News Daily said, and the outlet noted that the comparison is flattered by a contraction in the same quarter of 2025.

Services did most of the work. Tertiary activities, which include commerce and services, grew 1.1% from the previous quarter and 3.3% from a year earlier. Secondary activities, covering manufacturing, construction, mining and utilities, rose 0.8% on the quarter and 3.1% on the year. Primary activities such as farming and fishing were the only sector to shrink, falling 0.4% from the second quarter, though they were 1.8% higher than a year before.

Economic output for January through September was 1.9% above the same period of 2025, according to INEGI. Banamex, using its own calculation, put the figure at 1.8%, compared with 0.1% a year earlier, Mexico News Daily reported.

Banamex said the data show a notable recovery over the second and third quarters, driven by rising exports that lifted wholesale trade and export-focused manufacturing, according to Argus Media. The bank also pointed to public and private investment and consumer spending, which slowed slightly but remained above 2025 levels with support from a partial recovery in formal employment and large wage increases.

Andrés Abadía of Pantheon Macroeconomics told Reuters the slowdown from the second quarter reflected "a return to normal levels of activity" after an exceptionally strong quarter, according to Mexico News Daily. Banorte said the result supported its forecast of 1.9% growth for 2026, Argus reported.

The figures are a preliminary estimate. INEGI publishes a fuller breakdown later, and all numbers are subject to revision.

Mexico's tariffs push India to the table

Two days before the GDP release, India and Mexico signed terms of reference to start negotiating a preferential trade agreement, India's public broadcaster DD News reported on Oct. 28. Mexico's Undersecretary of Foreign Trade Luis Rosendo Gutiérrez Romano represented Secretary of Economy Marcelo Ebrard, and the talks took place during a visit to Mexico City by Indian Commerce Secretary Rajesh Agrawal, according to DD News and Swarajya.

The framework covers market access for goods, rules of origin, customs procedures, dispute settlement, sanitary rules, technical barriers to trade and trade remedies, DD News said. The two sides named automobiles, chemicals, electronics, pharmaceuticals, agri-food, energy, critical minerals and medical devices as areas for cooperation, and discussed a Mexican business mission to India in the first quarter of 2027.

The stakes for Indian exporters are concrete. India shipped US$5.73 billion of goods to Mexico in fiscal 2025-26, with automobiles the largest category at US$1.92 billion, according to Swarajya. Total two-way trade is about US$7.83 billion a year. Cars, textiles, footwear, plastics, steel, chemicals and toys are among the goods exposed to Mexico's new duties, the outlet said.

Because the duties apply only to countries without preferential arrangements, a signed agreement would be India's route to lower rates. The terms of reference set out the scope and roadmap for talks but no deadline, according to DD News.

What it means for Asian investors

Stronger Mexican growth driven by exports supports the case for companies that have built plants there to serve U.S. customers, including Asian manufacturers. The main risk to that model sits in Washington, where the U.S. has declined to extend the U.S.-Mexico-Canada Agreement, which now faces annual reviews of the pact.

INEGI's detailed third-quarter GDP report, including any revisions to Friday's estimate, is the next data point to watch. On trade, the first negotiating rounds between New Delhi and Mexico City will show how quickly Indian carmakers and drugmakers can win relief from duties of up to 50%.