Mexico’s Stagnant Economy, Deficit, and Poverty: A Detailed Analysis

Introduction

Mexico’s economy has been practically stagnant since 2019, contracting by 0.2% that year and plummeting nearly 6% in 2020 due to poor economic and public health management during the pandemic. The economy rebounded weakly between 2022 and 2024, growing a mere 1.2% in 2024. In 2025, the growth rate fell close to zero or just a few decimal points, detaching from the robustly growing U.S. economy, which increased by 18% between 2019 and 2025.

Economic Performance Overview

• Average annual growth rate of 0.85% from 2019 to 2025
• Total accumulation of 5.1% over the period
• Real per capita income stagnant despite a 5% population increase
• Several Latin American countries, previously poorer than Mexico, have surpassed it in GDP per capita

The Downfall: Key Events and Policies

Mexico’s decline began with the cancellation and destruction of the Nuevo Aeropuerto Internacional de México in 2018, followed by regressive and statist policies in energy, harassment of businesses through taxation, elimination of autonomous bodies, capture of electoral authority, creation of a spurious qualified majority for the regime in Congress, and dismantling and capture of the Judicial Power. Additionally, uncontrolled populism led to massive reallocation of public spending towards clientelistic subsidies, pensions (now consuming a quarter of public spending), unproductive militarized projects, and exorbitant subsidies for Pemex. Public investment in infrastructure and public services has dwindled, with an expected 30% drop by 2025.

Investment Trends

• Public and private investment, or Gross Accumulation of Fixed Capital, are fundamental growth drivers
• Mexico has failed to capitalize on its competitive advantages in the context of globalization, T-MEC, and proximity to the U.S.
• Export dynamism has not revived the economy
• Foreign direct investment mainly consists of profit reinvestment, not new investments
• Private consumption has weakened due to political and legal uncertainty throughout the period, causing a collapse in the construction sector

Key Questions and Answers

1. What are the main causes of Mexico’s stagnant economy?

Mexico’s stagnant economy is primarily due to poor economic and public health management during the pandemic, regressive policies in energy and taxation, dismantling of autonomous bodies, and uncontrolled populism leading to massive reallocation of public spending.

2. How has Mexico’s debt situation evolved?

Mexico’s public finances are in a critical state with uncontrolled public spending. The service of the debt has reached nearly 1.5 trillion pesos and is rapidly increasing annually. The public deficit reached a historical level of almost 6% of GDP in 2024 and is expected to surpass 4%, or 1.4 trillion pesos, in 2025.

3. What is the current state of poverty in Mexico?

Despite claims of reducing poverty by 13 million people through subsidies and discretionary salary increases, social deprivation indicators have worsened. Between 2018 and 2024, the population lacking health services increased by 24 million, social vulnerability rose by 9 million, and the population with at least three social deprivations reached 3 million, with extreme poverty being the most affected.

4. Why has economic growth not led to real poverty reduction?

Without genuine economic growth and productivity improvements, alongside populist subsidies and unproductive public spending funded by unsustainable deficits and debts, there can be no real reduction in poverty.