Economic Indicators Point to a Declining Economy
Preliminary figures suggest that the third quarter’s PIB growth will once again be negative. In the year ending September, formal employment (IMSS) added only 90,000 new positions, a stark contrast to the usual accumulation of around 700,000. Registered employers in IMSS decreased by 25,000 (including those with up to 5 employees), and the INEGI reports a decline in work formality by August, with a significant reduction in participation (2 million people). Business confidence and the investment climate remain negative across all sectors surveyed since March 2023 and 2024.
Inflation is rising, and the list of economic challenges continues to grow. The only sector showing dynamism is exports.
Government Prioritizes Popularity Over Economic Growth
Despite these concerning indicators, the government appears unconcerned. They continue to claim the economy is thriving without substantiation, aside from a single call for investment in the energy sector through “binding planning,” emphasizing state control (54% of electricity). This move is welcomed but shrouded in regulatory, budgetary uncertainty, and opacity. The Plan México remains more rhetoric than concrete action.
Policy Shortcomings Hinder Investment and Growth
Most policies fail to foster investment and growth in the short or long term. For instance, the judicial reform and selection of judiciary members, alterations to the amparo law, neglect of public investment, deterioration of health and education, and overlooked public safety along with its resources, tepid facilitation of energy investment, and lack of disaster prevention funds and proactive measures.
The 2026 Income Law includes various measures that neither aid investment nor support business development (especially for small businesses) and impose taxes and charges that inadvertently harm lower-income individuals, as they are not tied to contributors’ income.
Public debt (1.78 trillion pesos) nearly doubles the physical investment, allocated to projects lacking transparent and verifiable social benefit/cost assessments—irresponsible according to universally accepted fiscal prudence and budget law practices.
Government’s Focus on Popularity Endangers Fiscal Sustainability
The government’s policies suggest a lack of concern for the economy’s state and prospects, or an overreliance on a “favorable” trade agreement with the U.S., which is insufficient. Economic growth will primarily depend on productive investment and favorable conditions like energy security.
While a beneficial government-to-government agreement is crucial, productive investment must flourish for genuine growth.
Success Measured by Popularity, Not Economic Growth
The regime’s success metric is popularity, as seen with AMLO. While common in any regime, this approach becomes perverse when it comes at the expense of economic growth and population opportunities, gravely endangering fiscal sustainability and social well-being.
Key Questions and Answers
- What are the current economic indicators? Preliminary figures indicate negative PIB growth, a significant decrease in formal employment, rising inflation, and a decline in business confidence across various sectors.
- How is the government responding to these indicators? The government claims the economy is thriving, without substantiation, and has made limited efforts to stimulate investment in the energy sector.
- What policies are hindering economic growth? Judicial reform, alterations to the amparo law, neglect of public investment, and lack of disaster prevention funds are among the policies that fail to foster investment and growth.
- Why is the government’s focus on popularity problematic? Prioritizing popularity over economic growth jeopardizes fiscal sustainability and, consequently, social well-being.
