The Mexican economy is stagnant, investment is plummeting due to lack of confidence, employment is weakening, and the Bank of Mexico has once again lowered its economic growth forecasts for 2025. And while all this is happening, President Claudia Sheinbaum responds with a phrase already well-known in the halls of power: “Above all, we care about the well-being of the people.”
With that statement, she seeks to calm economic jitters and justify structural inaction, as if well-being could be sustained solely through populist rhetoric, without growth, without investment, and without the creation of formal jobs. In a country projected to grow just 0.1% —with a real risk of entering negative territory— the government’s response is to repeat ideological mantras: social programs, wage increases by decree, a reduced workweek, and a “Plan Mexico” that so far is little more than a slogan. More propaganda plan than development plan.
Thus, while Banxico’s technical staff warn about economic sluggishness, persistent inflation, and risk of contraction, the Executive Branch responds from the «People’s Morning Press Conference» with propaganda and placebos. And most alarming of all: it does so amid an environment of legal uncertainty and the dismantling of the Judiciary, which discourages any serious attempt at productive investment.
What follows is a portrait of an economy that has lost its way and a government that prefers to look the other way.
Makeup over stagnation
In its recently published Quarterly Report, the Bank of Mexico lowered its central GDP growth estimate for 2025 to 0.1%. Yes, virtually zero growth—a number that, in any country with people truly concerned about stability, would be an unmistakable warning sign. But here, those in power avoid using the word “recession” as part of the daily circus of tailor-made statistics.
And although Banxico’s projected growth range for this year spans from -0.5% to 0.7%, the official narrative insists on calling it “sluggishness,” not contraction. This semantic stubbornness does not change the fact that the Mexican economy today is practically at a standstill, and in some productive sectors, clearly contracting.
Deputy Governor Jonathan Heath said it plainly: “The economy is stagnant… and it apparently could remain that way for a while.” The serious issue is not just the lack of growth, but the absence of internal engines that could signal a reversal. With no productive investment, no force driving consumption, a government in the midst of a fiscal disaster of epic proportions, and no legal certainty, the outlook could not be gloomier.
Employment: The other face of collapse
In the same Quarterly Report, Banxico also drastically cut its projections for formal job creation. For 2025, it expects between 110,000 and 290,000 new jobs—a ridiculously low figure for an economy that claims to generate opportunities. At this pace, there will not be enough quality jobs for a young population still entering the labor market.
Worse yet, if we observe the behavior of formal employment registered with the IMSS, by April not even half of the lower bound of the forecast range had been reached. Official data shows that between April 2024 and April 2025, only 43,466 formal jobs were created, and just in the last available month, 47,422 jobs were lost. If the trend continues, we won’t just see zero net growth—we could end the year with a loss of up to 250,000 formal jobs.
The consequence is obvious: less employment means less disposable income for families, less consumption, and less growth. And in the overall labor market (formal and informal), the situation is equally bleak: according to INEGI, the employed population reached 59.9 million people in April 2025, just 88,000 more than a year ago—an annual increase barely noticeable in a country of over 127 million inhabitants.
And inflation? Another lost front
Meanwhile, the government and its monetary arm, Banxico, are facing a new inflationary uptick. In the first half of May, headline inflation reached 4.22%, once again exceeding the target range of 3% ± one percentage point. And worse: the problem does not appear to be under control.
The central bank’s deputy governors have said it openly: insecurity, lack of competition in certain sectors, high transport costs, and the market power of some companies are distorting prices and complicating the central bank’s ability to fulfill its constitutional mandate.
This is not a classic monetary phenomenon. It is a structural and political one. How can inflation be contained in a country where organized crime controls entire regions, monopolies operate with impunity, and the government has abandoned any effort to enforce effective competition policies?
The fiscal mirage and the collapse of investment
Banxico has also warned that the government’s fiscal consolidation—that is, the reduction of public spending—could be hurting the economy more than expected. The cut in public spending, far from generating confidence by reducing the fiscal deficit to 4% of GDP this year, is actually deteriorating economic activity by weakening public investment and government consumption, two of the few remaining growth drivers.
Adding to this is a -7.3% drop in capital goods imports (machinery, equipment) in the first quarter of this year, confirming the paralysis of private investment. No one invests when the environment is plagued by uncertainty, violence, arbitrary regulatory changes, and mixed signals from the government.
Now, on top of this troubling lack of confidence, comes the implementation of judicial reform that eliminates the independence of the Judiciary. In a country where judges will be elected on June 1 through a popular vote controlled by the Executive, in a process riddled with irregularities, legal certainty disappears. It will no longer matter who has the legal argument, but who has the government’s backing… or the money to lobby the judge.
This creates an extremely dangerous scenario for both domestic and foreign investment: business decisions are postponed, legal disputes become uncertain, and the rule of law ceases to be a guarantee. Simply put, lawsuits will no longer be won by those who have the law on their side, but by those who have the power—or the resources—to influence the judge. And thus, any economic reactivation strategy is dead on arrival.
Trump, tariffs, and international uncertainty
As if the domestic scene weren’t bad enough, the international environment isn’t helping either. The trade chaos sparked by Donald Trump’s erratic tariff policy—which shifts as impulsively as a tweet—has added further noise to the global value chains Mexico depends on.
Banxico experts acknowledge that external uncertainty is delaying investment decisions, both foreign and domestic. Mexican exports, while showing some resilience with 4.5% annual growth in the first four months of this year, will not be enough to avoid damage if trade barriers intensify or if the U.S. economy enters a slowdown phase, which it almost certainly will.
The missing piece: the federal government
What is most worrying in all of this is the government’s strategic vacuum. Faced with an environment of stagnation, persistent inflation, stagnant formal employment, and a collapse in productive investment, the Executive has chosen to deny, obscure, and distract the conversation with any topic—such as childhood obesity.
The Finance Ministry continues to project unrealistic growth and employment figures (1.5% to 2.3% according to the 2026 Preliminary Budget Criteria), and the presidential narrative insists “we’re doing well” without offering a single data point to back it up. Denying reality and relying on “alternative facts” remains the state policy.
And as if Banxico’s data weren’t already clear enough, President Claudia Sheinbaum responded to the GDP downgrade by solemnly declaring that her priority is “the well-being of the people.” Not growth, not employment, not productive investment. Well-being. How is that well-being achieved? According to her new economic decalogue: through guaranteed social programs, minimum wage hikes, and a vague “Plan Mexico” supposedly meant to reactivate industrial hubs.
In other words: in the absence of real growth, the government doubles down on magical formulas. As if raising wages by decree could compensate for the lack of jobs; as if handing out social support and pensions costing 2.16 trillion pesos this year could fix structural stagnation; as if making investment “announcements” were the same as creating conditions for real investment to flow.
While the economy stalls, the government clings to ideology and congratulates itself for distributing other people’s money. The problem is, that fantasy won’t last forever. And when the bill comes—already arriving in the form of inflation, unemployment, and economic stagnation—no social program will be enough to fill the hole left by incompetence.
Conclusion: A dose of reality
Banxico’s downgraded forecast is not just a technical adjustment: it’s a wake-up call. It’s a reminder that Mexico’s economy is on pause, that the current model isn’t working, and that the country needs a major course correction in its economic leadership.
But as long as the National Palace governs with ideology instead of data, we will remain trapped in an economy with no growth, no investment, no jobs… and now, no justice.
Alejandro Gómez Tamez
Director General, GAEAP
📩 alejandro@gaeap.com
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