Mexico’s Self-Assessment: A Mixed Bag of Progress and Challenges

Positive Self-Assessment by Mexico’s President Claudia Sheinbaum

Mexico’s government has expressed a highly positive self-assessment, with President Claudia Sheinbaum stating that the country is experiencing a “stellar moment.” Despite the trade policies of the United States, she emphasized that the Mexican economy demonstrates resilience. She also highlighted a shift from neoliberal policies, asserting that the era of minimal state intervention in development and wealth redistribution is over.

Key Achievements Highlighted by the President

1. Economic growth projected at 1.2% for the year.
2. Over 36 billion USD in Foreign Direct Investment (FDI) recorded.
3. The US dollar remains below 19 pesos.
4. Unemployment rate stands at 2.7%.
5. Annual inflation in July was 3.5%.
6. Minimum wage increased by 12% this year.
7. Mexico ranks second in America for lowest income inequality.
8. Social security extended to one million workers in telecommunication applications.
9. Government federal income reached 5 trillion 952 billion pesos.
10. Public debt remains at 50% of GDP as of August’s close.
11. Population in poverty decreased by 13.5 million, from 41.9% to 29.5% of the total population.
12. Mexico leads in tariff rates, with a favorable relationship with the US government.
13. Ambitious plan to strengthen Pemex and CFE, with Pemex aiming for 1.8 million barrels of oil per day and CFE constructing 40 new plants.
14. 2.3% of GDP allocated to the Well-being Programs, benefiting 32 million families.

President Sheinbaum asserted, “We are doing well and will do even better.”

Economic Context and Perspectives

While the government’s self-assessment appears positive, it is essential to consider independent perspectives for a more balanced view. Although private sector projections have been revised slightly upwards, the growth remains modest.

• Private Sector Projections: Analysts have revised their expectations for Mexico’s GDP growth to 0.40% for 2025 and 1.40% for 2026, still far from the government’s projection of 1.2%.
• Economic Indicators: The economy remains stagnant, with analysts from Banamex and CEESP predicting a 0.4% advance for 2025 and 1.5% for 2026. The CEESP reports that key economic indicators remain fragile, with no significant recovery in sight.
• Internal Factors and Trade Policies: Internal issues such as the lack of rule of law, insecurity, and corruption, combined with US tariffs, have increased uncertainty among businesses and consumers, negatively impacting investment and consumption—key growth drivers.
• Investment and Labor Market Trends: Public investment has fallen by 25.8%, with private investment contracting by 4.9%. Labor market informality has increased, with the formal workforce shrinking and the informal sector growing. The number of people earning more than one minimum wage has decreased, while those earning up to one minimum wage have risen.
• Consumption and Public Finances: Private consumption remains weak, with declines of 0.1% in June and July. Inflation has shown resistance to falling, particularly subjacent inflation. Although total government income grew by 3.4% in the first half of the year, it has not been enough to cover increased social program demands.
• Public Debt: The Historical Requirements Financial Balance of the Public Sector has increased by 1.8 billion from the previous year, reaching 17.8 trillion pesos.

Key Questions and Answers

• Q: How does the Mexican government view its current economic situation?
  A: The government expresses a positive self-assessment, highlighting economic growth, FDI, low inflation, and reduced poverty rates.
• Q: What are the private sector’s projections for Mexico’s economic growth?
  A: Private sector analysts have revised their expectations slightly upwards, projecting 0.40% growth for 2025 and 1.40% for 2026, still below the government’s 1.2% projection.
• Q: What challenges does Mexico’s economy currently face?
  A: Internal factors like the lack of rule of law, insecurity, and corruption, along with US tariffs, have increased uncertainty among businesses and consumers, affecting investment and consumption.
• Q: How are key economic indicators performing in Mexico?
  A: The economy remains stagnant, with weak private consumption, resistance to falling inflation, and insufficient public finances to cover social program demands.