Economy Shows Minimal Growth, Raising Questions About Plan México’s Effectiveness
According to the Indicador Oportuno de la Actividad Económica (IOAE) released by Mexico’s National Institute of Statistics and Geography (Inegi) in July, the Mexican economy is stagnant. The annual growth rate stands at a mere 0.1%, and monthly growth has fallen by 0.1%. The industrial sector has contracted by 1%, while services have managed to grow slightly, advancing by 0.8%.
Employment Market Reflects Economic Stagnation
The National Employment and Occupation Survey for June 2025 confirms the fragility of Mexico’s job market. Unemployment remains at 2.7%, with minimal changes compared to the previous year. However, informal employment has reached 54.8% of those employed, lacking social security. Moreover, over a third of workers earn less than the minimum wage. The creation of formal employment is insufficient, and income quality continues to deteriorate.
Plan México’s Effectiveness in Question
In this context, it is essential to question whether Plan México will be enough to reverse the current trend. The program focuses on infrastructure and market confidence, but recent data casts doubt on its effectiveness. Total investment decreased by 4% quarterly and 6.8% annually in the first quarter of 2025, with private investment falling by 3.6% and 4.4%, respectively (according to the OECD, June 2025).
Consumer Spending and Private Investment
The Indicador Mensual del Consumo Privado in the Interior Market, reported by Inegi in May, showed a 1% monthly and 0.9% annual decline. Both domestic goods and services experienced drops, with national goods falling 1.3%, and services decreasing by 0.1%. The Indicador Oportuno del Consumo Privado predicts further annual declines of 0.1% in June and 0.4% in July. Without stability in investment and without strengthening real wages, consumption and growth are unlikely to recover.
Plan México: Necessary but Insufficient
The government has made progress in tax incentives, such as accelerated deductions and support for small and medium enterprises (SMEs) along with bank agreements to extend credit. They have also expanded training programs like “Jóvenes Construyendo el Futuro” and issued decrees supporting circular economy projects with deductions for training and innovation. However, the simplification of procedures advances slowly, legal security lacks more robust guarantees, and training programs fail to reach those requiring job reconversion. Until these aspects are reinforced, the economy will remain trapped in low-productivity services.
Private Sector’s Role and Outlook
The private sector has shown progress in venture capital and sectors like technology and renewable energy. However, it generally remains cautious. The international agency Coface, specializing in credit insurance and country risk analysis, predicts that private investment will contract in 2025 and only recover slightly in 2026. Although there are cases of joint investment in infrastructure, much of the business community maintains a wait-and-see attitude. Without more investment in innovation, technology, and better-paying jobs, stagnation will be a shared responsibility of the government and private sector.
Key Questions and Answers
- Q: What does the recent economic data suggest about Mexico’s growth? A: The economy is stagnant, with minimal growth and a contracting private investment sector.
- Q: How does Mexico’s job market reflect the current economic situation? A: Unemployment remains low, but informal employment is high, and many workers earn less than the minimum wage.
- Q: Is Plan México likely to be effective in reversing the current economic trends? A: Recent data casts doubt on Plan México’s effectiveness, as total and private investment have declined.
- Q: What are the prospects for consumer spending and private investment in Mexico? A: Consumer spending is declining, and private investment is expected to contract in 2025 before recovering slightly in 2026.
- Q: How can Mexico’s economy be revitalized? A: The government must reinforce aspects like simplifying procedures, ensuring legal security, and expanding training programs to reach those needing job reconversion.
- Q: What role does the private sector play in Mexico’s economic recovery? A: The private sector should invest more in innovation, technology, and better-paying jobs to help revitalize the economy.
