Introduction
The Mexican economy’s stagnation has raised concerns about the country’s public finances in 2025. According to the Ministry of Finance and Public Credit (SHCP), the 2025 fiscal year closed similarly to what was anticipated in September when the macroeconomic program for the year was published. However, the state of public finances remains worrying.
Fiscal Performance and Challenges
The government managed to reduce the fiscal deficit, or “fiscal consolidation,” which was deemed necessary even by the government itself. However, the reduction fell short of expectations. In 2024, the public deficit reached 4.8% of GDP, surpassing the programmed 3.9% (in its broadest version, public sector financial requirements). These figures are higher than those of 2013-2018 (3% on average) and 2019-2023 (3.7%).
Public revenue exceeded projections, with tax revenues being 0.5 percentage points of GDP higher than anticipated. Nevertheless, this did not translate into improved fiscal performance, as public spending deviated more from the program: 26.4% versus 25.5%.
International Comparison
Compared to other countries, Mexico’s public deficit in 2025 is not significantly smaller. In fact, it is higher than countries like Germany, Nordic nations, Chile, Peru, Costa Rica, Thailand, and Indonesia. Moreover, the gross public debt, at 57% of GDP, is not particularly lower; it is more comparable to Colombia and Costa Rica’s levels and higher than those of Chile, Peru, Indonesia, and the Philippines, for example.
Macroeconomic Risks and Future Prospects
In this economic environment, the concentration of public spending on social programs and questionable infrastructure projects will likely lead to unsustainable public finances eventually.
The Bank of Mexico’s survey indicates a growth expectation of 1.3% for 2026 and around 1.8% for the next decade, with business confidence continuing to decline. The International Monetary Fund forecasts slower growth for Mexico and emerging and developing economies in 2026 and 2027 compared to the global average.
Government’s Focus and Potential Solutions
The government appears concerned about the lack of economic growth and has recently met with economists, bankers, and business leaders to explore ways to stimulate the economy.
However, as previously mentioned, sustainable growth and investment cannot result from meetings, agreements, or photographs. Instead, they require a favorable environment with essential public goods: certainty, clear and secure legal processes, legality, the rule of law, useful infrastructure, and energy security, among others. These elements should be prioritized alongside long-term investments in human capital (education and health) and public security.
Unfortunately, the current regime seems unwilling to create such an environment. Its focus remains on securing votes for its continued rule, potentially leading to attempts to stimulate the economy through increased public spending. This approach would accelerate fiscal unsustainability and heighten the risk of a macroeconomic crisis.
Key Questions and Answers
- What is the current state of Mexico’s public finances in 2025? The fiscal deficit, though reduced, fell short of expectations at 4.8% of GDP, higher than the programmed 3.9%. This is a cause for concern amid economic stagnation.
- How does Mexico’s public deficit compare internationally? Mexico’s public deficit is not significantly smaller than those of countries like Germany, Nordic nations, Chile, Peru, Costa Rica, Thailand, and Indonesia.
- What are the macroeconomic risks facing Mexico? The International Monetary Fund forecasts slower growth for Mexico and emerging and developing economies in 2026 and 2027 compared to the global average. Business confidence is declining, and the concentration of public spending on social programs and questionable infrastructure projects poses risks to fiscal sustainability.
- What measures can the government take to address these challenges? The government should prioritize creating a favorable environment with essential public goods, such as certainty, clear legal processes, legality, the rule of law, useful infrastructure, and energy security. Long-term investments in human capital (education and health) and public security are also crucial.
