Introduction
On December 19, the Mexican government released data on poverty and inequality reduction, published by INEGI and the World Bank. According to this information, Mexico has managed to decrease poverty and incorporate a larger number of people into the middle class, with results surpassing those in the rest of Latin America.
Poverty and Middle Class Reduction Figures
Based on these figures, the proportion of people in poverty dropped from 35% to 22% between 2018 and 2024, while the middle-class population increased from 27% to 40%. The Gini coefficient, an indicator of inequality ranging from 0 (perfect equality) to 1 (maximum inequality), improved from 0.46 in 2016 to 0.42 in 2024.
Middle Class Definition
According to the World Bank’s methodology, middle class refers to those earning more than 17 USD per day (approximately 306 MXN at the current exchange rate of 18 MXN/USD), equating to around 9,180 MXN monthly. Given that a basic basket costs nearly 4,700 MXN, a person with this income could barely afford less than two baskets per month.
Government Explanations and Reality Check
Official explanations for these results mainly point to the increase in the minimum wage, expansion of social programs, and remittances. However, believing that a Mexican family (typically consisting of four members) can live comfortably on less than 10,000 MXN monthly, beyond the statistical label of “middle class,” is unrealistic.
Missing Elements in the Analysis
Economic Growth: The economy is projected to grow by a mere 0.3% in 2025, down from an average annual growth rate of 2% before 2018. The projected growth for 2026, at 1.2%, relies on uncertain factors like T-MEC renegotiation or the impact of the soccer World Cup.
Employment: While the official unemployment rate stands at 2.7%, the labor market has shifted towards informality, which now accounts for 55% of the economically active population. In 2025, only 962,000 formal jobs were created, while 442,000 formal jobs were lost. This is partly due to the rising minimum wage, which increases labor costs without corresponding economic growth or sales.
Challenges for Sustaining the Strategy
The government allocates 3.8% of the GDP solely to debt interest payments, surpassing remittances (3.3% of the GDP) which amount to 61 billion USD and represent the second-largest source of foreign currency. With this scenario, the central challenge for 2026 is to achieve economic growth; otherwise, the strategy to reduce poverty and inequality risks becoming an unwelcome gift for Three Kings’ Day.
Key Questions and Answers
- Q: What are the official explanations for the reduction in poverty and inequality? A: The government attributes these results to the increase in minimum wage, expansion of social programs, and remittances.
- Q: How does the Mexican government define middle class? A: The World Bank defines middle class as those earning more than 17 USD per day (approximately 306 MXN).
- Q: What are the missing elements in the government’s analysis? A: The analysis omits near-zero economic growth and the shift towards informal employment.
- Q: What challenges does the government face in sustaining its strategy? A: The main challenge is achieving economic growth, as the current strategy risks becoming unsustainable without it.
