Introduction
The year 2025 has been a disastrous period for Mexico’s economy, employment, and population. As is often the case, there’s hope that the following year will be better; however, under the current paradigm, there are few elements that inspire optimism. It seems likely that the trend initiated in 2018 will persist, unless an unexpected miracle occurs, as in 1977, unrelated to government expertise or policies.
The Oil Boom and Subsequent Crisis (1970s)
In the late 1970s, Mexico discovered significant oil reserves and became a net exporter of crude almost unintentionally. The phrase “we must get used to managing abundance” became famous, attributed to President López Portillo. However, just five years later, Mexico was mired in one of its worst modern-day crises: the debt crisis erupted in 1982, making Mexico one of the world’s most indebted economies with no resources to cope with falling oil prices and rising interest rates.
- Devaluation exceeded 477%
- Inflation surpassed 100%
- Fiscal deficit reached 16% of GDP: a true macroeconomic folly
This episode led to what is known as the “lost decade,” bringing us to the central point: Mexico stands on the brink of another decade without economic growth.
The Slow Growth of 2018-2024
During the 2018-2024 period, the average annual growth rate was 0.8%, placing it among the lowest periods since the most critical years of the 1980s. The population growth rate was considerably lower, averaging 0.86% annually, and inflation averaged 5% per year.
The currency depreciation was minimal, but public debt increased from 10 to 20 trillion pesos in six years, rising from 46% to 51% of GDP.
Stagnation Continues
The low economic growth rate has persisted for seven consecutive years, with estimates ranging from 0.5% to -0.5%, positioning Mexico as the slowest-growing economy in the region.
The outlook for 2026 is equally unpromising. The most optimistic estimates point to a growth rate near 1.2%. Official explanations for this performance vary: tariffs, the US-China trade war, low growth in Mexico’s primary trading partner, renegotiation of the North American Trade Agreement, and preceding factors like the pandemic and the war in Ukraine.
However, Mexico has failed to capitalize on its geographical position or the nearshoring opportunity. Additionally, it hasn’t managed to attract new investments. The cancellation of NAIM in 2018, the disappearance of autonomous bodies, judicial reform, and growing insecurity have tarnished Mexico’s image as a reliable investment destination.
- Private investment has fallen nearly 7%
- Public investment contracted by over 22% in 2025
Contrasting Periods: 1982-1988 vs. 2018-2024
The fundamental difference between the 1982-1988 and 2018-2024 periods lies in the starting point. In the 1980s, Miguel de la Madrid inherited an economy in intensive care; conversely, in 2018, a relatively stable economy with 2.0% annual growth (below the US but in line with regional averages), a fiscal deficit of only 2.3%, 4.8% inflation, and relatively controlled public debt was inherited.
However, after years of quadrennial governance, public debt has doubled, with additional risks stemming from its usage—mainly financing current spending and social programs. The increased debt servicing represents another risk that, if not addressed promptly, could lead to insolvency and a potential fiscal crisis.
Key Questions and Answers
- What led to Mexico’s economic stagnation in 2025? The low economic growth rate has persisted for seven consecutive years, with estimates ranging from 0.5% to -0.5%, making Mexico the slowest-growing economy in the region.
- How does Mexico’s current situation compare to the 1980s debt crisis? Unlike the 1980s, when Mexico faced a severe debt crisis with no resources to cope with falling oil prices and rising interest rates, today’s challenges are more about slow growth and debt management.
- Why has Mexico failed to attract new investments? Factors such as the cancellation of NAIM in 2018, disappearance of autonomous bodies, judicial reform, and growing insecurity have negatively impacted Mexico’s image as a reliable investment destination.
- What are the risks associated with Mexico’s public debt? Despite being manageable, public debt has doubled in recent years. Additional risks stem from its usage, primarily financing current spending and social programs. Increased debt servicing poses another risk that, if not addressed promptly, could lead to insolvency and a potential fiscal crisis.
