No Happy Ending for 2025

BySaul Escobar Toledo

This article by Saul Escobar Toledo originally appeared in the January 21, 2026 edition of El Sur Acapulco.

According to data released by INEGI in recent days, the Mexican economy did not finish the year well. Let’s
first consider the indicators for gross fixed investment, as these largely explain the problems we faced last
year. Through October, this sector showed a year-on-year decline of 5.8 percent. According to other reports
(Siller), this marked fourteen consecutive months of contraction. For the entire year, the decrease is expected
to reach 7.1 percent. It should be noted that investment in machinery and equipment fell by 10.3 percent
between October 2024 and the same month in 2025. Most worryingly, public investment decreased by 20.2
percent, particularly in the construction industry, with a drop of almost 31 percent. Meanwhile, private
investment fell by a total of 4.9 percent: it increased by 0.8 percent in the construction industry, although
purchases of machinery and equipment shrank by 10.2 percent.

The behavior of these indicators was reflected in employment. In the manufacturing industry, the reduction in
personnel was 2.73 percent through November. The impact was strongest in the manufacture of transportation
equipment (-7.44 percent) and the manufacture of machinery and equipment (-6.05 percent).

Not all export manufacturing sectors experienced a decrease in total employment. The manufacture of
computer equipment, communications equipment, and electronic components saw an increase of 2.75 percent.
This is because exports of computer equipment to the United States have boosted the growth of Mexico’s total
exports. Thanks to the low tariffs on these products, Mexico is replacing imports from other Asian countries, mainly China. It is estimated that the value (in dollars) of these products experienced an annual growth of 84.39 percent, paying a tariff of 0.27 percent as of September, while exports of passenger cars accumulated a drop of 7.26 percent, paying a tariff of 14.97 percent as of September.

Two unfortunate events coincided last year: Trump’s tariff policy and the Mexican government’s adjustment of public spending, which resulted in a reduction in both public and total investment.

However, manufacturing establishments in the maquiladora industry (IMEX program) also reduced their workforce by 3.3 percent between November 2024 and the same month in 2025.

Thus, according to data from the third quarter of 2025, the number of salaried and wage-earning workers had decreased by more than 225,000, while the number of informal sector workers employed in unregistered micro-businesses—such as street vendors, domestic service providers, and various producers and artisans—increased by more than 800,000 (not including paid domestic work, those working in companies and government without social security, and agricultural workers).

Undoubtedly, the United States’ confusing, aggressive, and unpredictable trade policy has affected Mexican exports to that country and, consequently, investments in machinery and equipment, severely impacting formal employment. The boom anticipated years ago with the aforementioned “nearshoring” has been declining, although not for all products. Mexico’s attempt to replace China as the main exporter of manufactured goods to the United States has met with only partial success. Despite becoming their most important supplier, some products
have seen declines while others have experienced increased production, but overall, the effects for Mexico have not translated into significant growth.

The drops in investment in machinery, equipment, and the construction industry, and their impact on manufacturing employment, were decisive for the economy as a whole. Last year, GDP growth is estimated at 0.6 percent or less, far from the 1.5-2.3 percent forecast by the Ministry of Finance. The manufacturing sector, for its part, had contracted by 0.8 percent through November.

These figures show that two unfortunate events coincided last year: Trump’s tariff policy, which particularly affected exports of transportation equipment; and the Mexican government’s adjustment of public spending, which resulted in a reduction in both public and total investment. Consequently, the economy stagnated, and salaried employment declined, with a resulting increase in informal work. This coincidence, therefore, has an internal component that affects the entire productive apparatus. If the recessionary trend in public investment continues, Mexico will remain stagnant, even if manufactured exports grow, which is also uncertain until the effects of the USMCA negotiations dissipate, and perhaps even afterward, if Trump maintains his erratic policies.

However, in addition to these two short-term factors that emerged last year, there are long-term, structural causes that have affected the economy and employment. The export-oriented manufacturing industry continues to lose ground because it is increasingly reliant on imported inputs. In other words, many components of the final product are not produced domestically.

According to data provided by El Economista, in the third quarter of 2025, the industrial sector’s GDP represented 30.8 percent of total output, while manufacturing accounted for 20.4 percent. In 2018, these figures were 32.6 percent and 20.5 percent, respectively. Looking at data from 2000, the decline is even more pronounced, as in that year the industrial sector represented 37.9 percent and manufacturing 23.2 percent. This indicates a long-term trend of deindustrialization despite the boom in manufactured exports.

The Ministry of Finance and Public Credit (SHCP) asserts that by 2025, Mexico had consolidated its position as a regional leader in exports. “We are,” it states, “the leading exporter of the top 20 high-tech products, such as light gasoline-powered vehicles and digital processing units (computers), with a value exceeding $600 billion.” This amount surpasses, for example, that of Brazil, whose total exports amounted to nearly $350 billion.

However, the added value of our exports is very low, meaning that Mexico produces these goods, to a large extent, using parts and components imported from the United States. This also affects domestic consumption: although wages are rising (especially minimum wages and, to a lesser extent, contractual wages), formal employment is growing very little, while informal and vulnerable jobs are increasing.

Thus, when cyclical factors are added to this structural trend, the result is economic stagnation (and the risk of a recession), in addition to a reduction in formal employment in absolute numbers.

The Mexican economy not only requires certainty in its relations with the United States; it also urgently needs greater public investment and an industrial policy that encourages manufacturing sectors that supply inputs and equipment to industries serving the export market and domestic consumption. Increased public spending on the infrastructure necessary for economic expansion is also essential, including building more ports, highways, railways, and energy sources (especially clean ones). Likewise, more substantial support for research, technological
development, and higher education is needed. And, of course, the infrastructure that directly serves the population—hospitals, schools, and urban services—must be maintained. If public investment continues to decline, the economy and employment will be highly vulnerable to external shocks, and the foundations for sustained growth will not be laid. At best, we will remain a vast assembly plant; at worst, a country without decent employment opportunities for Mexicans.