Mexico Needs a Macroeconomic Policy for Growth, not the Finance Sector

ByArturo Huerta González

This editorial by Arturo Huerta González originally appeared in the February 17, 2026 issue of La Jornada de Oriente, the Puebla edition of Mexico’s premier left wing daily newspaper. The views expressed in this article are the authors’ own and do not necessarily reflect those of Mexico Solidarity Media or the Mexico Solidarity Project.

Some [in Mexico] argue that the macroeconomy is sound, that all that’s needed is an industrial policy to boost productivity and output; but it’s important to note that the prevailing macroeconomic policies — high interest rates, fiscal austerity, and currency appreciation —coupled with the free movement of goods and capital and deregulation of the banking sector, have reduced the size and role of government in the economy, favoured the financial sector and international corporations, and negatively impacted the productive sector and national employment, leading to increased dependence on foreign capital inflows.

The prevailing macroeconomic conditions prevent the implementation of any industrial or agricultural policies, hence the destruction of productive capacity, pressures on the external sector, and the fragility of the economy, which renders it incapable of coping with external adversities. Industrial and agricultural policies require low interest rates, increased subsidies and public spending, a competitive exchange rate, and a generalized protectionist policy, none of which exist in the country.

The lack of growth prospects and uncertainty surrounding the review of the USMCA have led to a decline in private investment. The government and the central bank are not taking action to curb the downward trend in economic activity. High interest rates persist, and the government continues its restrictive fiscal policy. Priority is given to promoting capital inflows, which increases debt, maintains currency appreciation, fuels import growth, drives down production, and leaves the economy fragile, as repayment conditions are not in place. The country has taken on debt to pay off existing debt.

The government and the central bank must create profitable conditions in the productive sector to incentivize investment. To achieve this, they must lower interest rates, increase public spending, and maintain a competitive exchange rate. This would increase demand, national income, and borrowing capacity, thereby boosting both the supply and demand for credit and stimulating investment.

Conventional economists oppose increased public spending, arguing that it would generate inflation, high interest rates, and more debt, thus negatively impacting private investment. This is false. If increased public spending is channeled into technological development and productive capacity, supply would increase to meet the higher demand generated by the increased spending, preventing price increases. Businesses would see increased demand, sales, and revenues, which would encourage their investment decisions. Interest rates would not rise, as increased deposits and bank reserves would lead to a reduction in interest rates.

Without changes to the prevailing macroeconomic policies, the banking and financial sector will continue to be favored at the expense of the productive sector, employment, and economic growth. The functions of the central bank must be changed. It should incorporate the objective of growth and high employment, and purchase government debt directly at low interest rates to stimulate investment, as well as private investment in import substitution of manufactured and agricultural products , and to create jobs in order to reduce the trade deficit and capital inflow requirements.

The government doesn’t have to submit to US dictates, as it’s doing by imposing tariffs only on imports from China, suspending oil shipments to Cuba, and withholding the basic grains from the USMCA that domestic agricultural producers demand. The government is doing this to curry favor with the US government and receive preferential treatment in the USMCA negotiations. The Mexican government is ignoring the fact that the Trump administration is violating all established international norms and has indicated that its decisions are based on US interests. Therefore, they will force Mexico to buy more from them and sell less, and encourage many US companies to return to the United States. They are coming for the energy sector and critical minerals. The problem is that Mexico is not prepared to face the adversities this will cause, especially given the lack of changes to the prevailing macroeconomic policy.