Introduction
The global economic landscape is deteriorating, with the OECD, IMF, and Fitch all agreeing that the United States, China, and the European Union are facing low growth rates. Mexico, heavily reliant on these markets, is not immune to the consequences.
Impact on Mexico
The United States, which receives 83% of Mexico’s exports, is projected to grow by a mere 1.6% this year (OECD, June 3, 2025). Donald Trump’s erratic tariff policies have increased import costs, raised prices, and stifled consumer demand. This results in reduced demand for Mexican products, decreased investments, and growing uncertainty.
According to the IMF, China is expected to grow less than 4% in 2025, facing deflationary pressures and high youth unemployment. The European Union is projected to grow by only 0.8%, with Germany stagnant and Italy and France grappling with fiscal tensions. The synchronized slowdown among these three major economies weakens global trade and undermines the prospects of exporting nations like Mexico.
Mexico’s outlook is grim, with the IMF estimating a contraction of -0.3% in 2025. Banxico predicts 0.1%, the OECD forecasts 0.4%, and the private sector is only projecting 0.08%. Only Hacienda remains optimistic, projecting growth between 1.5% and 2.3%.
Economic Consequences
The impact is already evident in people’s wallets. According to INEGI, real wages fell by 2.7% in the first quarter, and in March, informality surpassed 54%, while underemployment reached 6.6% of those employed. Additionally, fixed capital investment has been declining for three consecutive quarters, consumer and business confidence is deteriorating, internal consumption is weakening, and high interest rates are restricting credit.
Institutional mistrust further exacerbates the situation. The judicial reform, lack of clear investment rules, and growing centralization have caused caution among domestic and foreign investors. Political uncertainty now rivals economic uncertainty as a structural constraint.
The fiscal front also faces risks. Although Hacienda reports revenue exceeding expectations and projects a deficit of 3.9% of GDP for 2025, the room for increasing public spending remains limited due to low growth and debt financing costs. Moreover, while the exchange rate is revaluing against the dollar primarily due to the weakness of the US currency and not internal factors, prolonged perceptions of political or institutional uncertainty could lead to increased capital outflows and currency volatility.
Sheinbaum’s Plan Mexico Faces Challenges
In this context, President Sheinbaum’s ambitious Plan Mexico—aiming to stimulate infrastructure, nearshoring, innovation, and well-paying jobs—faces a difficult situation. More concerning is that if growth stalls and wages do not improve, it will be challenging to make progress on social goals such as poverty reduction, expanding healthcare coverage, or improving educational quality. Social well-being promises will be tethered to an economic performance that currently does not exist.
If social frustration grows, the risk of political instability and institutional breakdown will also increase.
Therefore, the government must adjust its approach and confront external and internal restrictions with realism. Optimistic rhetoric and well-intentioned plans alone will not reverse the current economic inertia without firm, credible, and urgent decisions.
Key Questions and Answers
- Q: How is the global economic slowdown affecting Mexico?
A: The slowdown in the US, China, and the European Union is negatively impacting Mexico’s economy due to its heavy reliance on these markets for exports.
- Q: What are the growth projections for Mexico in 2025?
A: The IMF estimates a contraction of -0.3%, while Banxico predicts 0.1%, the OECD forecasts 0.4%, and the private sector projects 0.08%. Hacienda remains optimistic with a projection between 1.5% and 2.3%.
- Q: What are the consequences of the slowdown for Mexican citizens?
A: Real wages have fallen, informality and underemployment are rising, fixed capital investment is declining, consumer and business confidence is deteriorating, and credit restrictions are tightening.
- Q: What fiscal challenges does Mexico face?
A: Despite exceeding revenue expectations, the room for increasing public spending is limited due to low growth and debt financing costs. Additionally, prolonged political or institutional uncertainty could lead to capital outflows and currency volatility.
- Q: How is President Sheinbaum’s Plan Mexico affected by the current economic situation?
A: The plan faces significant challenges due to the stalled growth and stagnant wages, making it difficult to achieve social goals like poverty reduction and improved public services.
