Last Thursday, two pieces of data arrived that, placed side by side, tell the story with uncomfortable precision. In Washington, the Bureau of Economic Analysis reported that the United States economy grew 0.5% compared to the previous quarter and 2.66% – at an annual rate to facilitate comparison with Mexican data – during the first quarter of the year. In Mexico, Inegi confirmed that the Mexican economy did exactly the opposite: it contracted 0.8% quarterly, its first decline in five quarters. In the annual comparison, Mexican production grew only 0.2%. The country with which we share a border, a trade agreement, and more than 80% of our exports, and which is also the largest economy in the world, grew. We did not.
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The Mexican data came worse than analysts expected. The consensus anticipated a contraction of around 0.5 or 0.6 points. Reality showed a greater drop. The worrying thing is not the number itself, but the breadth of the deterioration: the decline was widespread across the three major sectors. Primary activities fell 1.4% quarterly, industry 1.1%, and services – where Mexico’s economic activity is concentrated – 0.6%. There was no sector pulling the rest. All slowed down at the same time.
There is a narrative that circulates with some ease and that should be questioned: that Mexico’s low growth is fundamentally an external problem, a consequence of Trump’s tariff uncertainty, the conflict in the Middle East, and an adverse global environment. Those factors exist and weigh. But the comparison with the United States complicates that explanation. Our neighbor faced exactly the same geopolitical environment, the same war in Iran, the same soaring oil prices, the same commercial uncertainty, even if self-inflicted, and grew. The difference cannot be explained only by external winds.
What lies behind Mexico’s stagnation has a proper name: investment. Gross fixed capital formation has been in free fall for months. In January, it fell 2.2% annually in seasonally adjusted terms. Another contraction is estimated for February; the data will be published this week. Public investment was not prioritized in this year’s budget. Private investment does not arrive because the certainty it needs is not given. And without investment, there is no new productive capacity, no formal employment, no sustained growth.
Private consumption did not help either. The weakness of the labor market, the moderation of credit, and the slowdown of remittances — which fell 4.6% in 2025 — have eroded household purchasing power. In the United States, consumption also slowed, but business investment — partly driven by the massive bet on artificial intelligence — and public spending compensated. In Mexico, there is no alternative engine to offset internal weakness. Neither public spending, which was cut, nor investment, which falls, nor consumption, which slows.
The irony is that the only component that worked in the quarter was precisely the one that depends on the outside: exports. In March, foreign sales reached a historic high of 70.727 billion dollars, with an annual growth of 27.7%. The accumulated total for the first quarter was also a record. Mexico exports more than ever. But exports are not enough to grow when the rest of the economy contracts. They are a powerful engine tied to a vehicle that has the brakes applied from within.
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Monetary policy also enters the equation. Everything seems to indicate that Banxico will cut its reference rate by another 25 basis points next Thursday, bringing it to 6.5%, which most analysts consider the terminal level of the easing cycle. But a 6.5% rate will not solve the structural problems that hinder investment. Cheaper money helps marginally. It does not replace institutional certainty nor the infrastructure budget the country needs.
The second quarter could be better. The rebound in manufacturing exports in March, the recovery of capital goods imports, and a possible boost in public spending are signs that the bottom could be near. Banamex, in its weekly report of May 1, revised its annual growth projection to 1.3%, down from 1.6%. The IMF also projects 1.3%. These are estimates that incorporate some recovery in the second half of the year. But they are also projections that assume uncertainty will not escalate — in the USMCA, in the Middle East, in the fiscal environment — and that private investment will begin to respond to signals that are not yet entirely clear.
Meanwhile, the week that ended marks a turning point regarding the fight against organized crime. We cannot think that there are different and clearly defined paths in trade negotiations and all other aspects of a close but complicated relationship. The USMCA review is not only commercial nor merely technical.
The definition of success will have to be reconsidered. Mexico will have achieved much, very much, if it maintains a preferential relative position compared to the rest of the world. As long as the average tariff paid by Mexican exports arriving in the United States is lower than that of others, the negotiation will have been successful. Now, for that to happen, there will have to be collaboration – and a lot – with the northern neighbor. At some point, the bill must be paid for six years of allowing the growth of the country’s criminal networks. It is regrettable that it comes from the neighbor, but from within, it is appreciated.
The Mexican economy has been in a back-and-forth for several quarters that leads nowhere. In per capita terms, the country has gone years without significant progress. Meanwhile, public debt approaches 61% of GDP and rises. The margin for errors narrows. And the time lost without growing is not recovered: it is employment that was not created, income that did not arrive, opportunities that evaporated. That is the true cost of stagnation. It does not appear in the headlines, but people pay it every day.
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