# Oaxaca’s Economy Falls 2.3% During the Second Quarter of 2025
# Oaxaca’s Economy Falls 2.3% During the Second Quarter of 2025
The state of Nayarit recorded the sharpest contraction this quarter, with a 3.8% decline.
The state of Nayarit recorded the sharpest contraction this quarter, with a 3.8% decline.
 [](https://www.oaxacainforma.com/images/nacional/2025/2510/oaxacas-economy-falls-2-3-second-quarter-2025.jpg "Oaxaca’s Economy Falls 2.3% During the Second Quarter of 2025")[Oaxaca’s Economy Falls 2.3% During the Second Quarter of 2025](https://www.oaxacainforma.com/images/nacional/2025/2510/oaxacas-economy-falls-2-3-second-quarter-2025.jpg "Oaxaca’s Economy Falls 2.3% During the Second Quarter of 2025")
#### [Oaxaca’s Economy Falls 2.3% During the Second Quarter of 2025.](https://www.oaxacainforma.com/images/nacional/2025/2510/oaxacas-economy-falls-2-3-second-quarter-2025.jpg "Oaxaca’s Economy Falls 2.3% During the Second Quarter of 2025") |Photo: [Courtesy](https://oaxacainforma.com "Courtesy")
[ Redacción Oaxaca Informa ](https://www.oaxacainforma.com/es/redactores "Redacción Oaxaca Informa")
- 30/10/2025
- 21:10
- [ National ](https://www.oaxacainforma.com/index.php?option=com_content&view=category&id=61&lang=en-GB)
During the second quarter of 2025, **18 federal entities in Mexico reported growth in their economic activity**, 13 showed declines—including Oaxaca—and one remained unchanged, according to data from the National Institute of Statistics and Geography (INEGI).
The Quarterly Indicator of State Economic Activity (ITAEE) shows that **the states with the most significant quarterly growth** were:
1. Hidalgo: 3.1%
2. Michoacán: 3.0%
3. Guanajuato: 2.9%
4. Nuevo León: 2.6%
5. Coahuila: 2.4%
## Oaxaca Faces Economic Contraction
followed by Sinaloa with a 2.8% drop amid ongoing violence in the state, **Oaxaca with 2.3%**, and Morelos, whose economic activity remained stagnant.
Mexico’s GDP for the April–June period increased 1.2% year-over-year. **Thirteen states registered decreases in their economic activity** during this period, while 18 advanced and one—Zacatecas—remained unchanged.
On an annual basis, Hidalgo (7.1%), Guanajuato (4.5%), Nuevo León (4.2%), Mexico City (3.7%), Michoacán (3.7%), and **Tamaulipas (3.3%) reported the strongest growth**.
Using original figures, **Hidalgo grew 5.7% annually in the second quarter of 2025**; Michoacán and Guanajuato grew 3.8% and 3.4%, respectively. Meanwhile, Campeche, Quintana Roo, and Tabasco contracted by 13.4%, 9.4%, and 7%, respectively.
## What Is an Economic Contraction?
An economic contraction **is a general decline in economic activity within a country, state, or market**, characterized by decreases in production, consumption, and investment. It typically follows a period of growth and is often associated with rising unemployment due to layoffs.
## Causes of Economic Contraction
1. Reduced production: Companies produce fewer goods and services, which may result from internal factors (such as high taxes) or external factors (like low consumer demand).
2. Falling consumption and investment: Households and businesses spend and invest less, worsening the slowdown.
3. Rising unemployment: Lower production leads companies to lay off workers to cut costs, increasing unemployment rates.
4. Market impact: It can cause declines in investment values—such as stocks—and an overall loss of consumer and business confidence.
5. Part of the economic cycle: Contraction is a natural phase of the economic cycle, which also includes expansion, peak, and trough stages.