Mexico Investment Extends One of Longest Slumps in Decades

The Angel of Independence monument on Paseo de la Reforma in Mexico City. Photo by Cesar Rodriguez /Bloomberg

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(Bloomberg) — Lea en español

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Mexican gross fixed investment extended its decline in March, underscoring concerns over the government’s domestic policies and uncertainty over tariffs and trade with the US, the country’s No. 1 trading partner.

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Capital investment shrank 3.1% in March from the same month a year earlier, and follows on the heels of February’s 3.5% decline, according to seasonally adjusted figures published Thursday by the National Statistics Institute. 

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Latin America’s second-largest economy has now seen 19 consecutive months of negative total investment, one of the longest periods of decline in the last four decades, driven primarily by a contraction in private investment amid the economy’s slowdown. 

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“The declines are nothing more than a lack of confidence in investing in Mexico,”  Gabriela Siller, director of economic analysis at Banco Base, said. “Those declines have caused the country’s potential GDP — that is, the maximum rate at which we could grow — to fall to just 1.4%”

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Investment is also being weighed down by the ruling Morena party’s overhaul the nation’s courts, which led to the election of half of the country’s judges, including all of the members of the Supreme Court, by popular vote last year.

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Critics argued that the election of judges undermined the independence of Mexico’s judiciary, the only branch of government that was out of Morena’s control.

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President Claudia Sheinbaum contends that these changes have not affected business sentiment, but it was precisely in September 2024, when that reform was approved, that the decline in investment began.

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Last week, congress approved changes to the judicial reform proposed by Sheinbaum seeking to address investors’ concerns, restoring an examination process for the prospective candidates to the bench, creating a committee to review qualifications and establishing annual performance evaluations for new judges.

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Mexico’s central bank in a report last week said that investment is expected to continue showing weak performance at least until the second half of 2026, “reflecting the prevailing uncertainty surrounding the trade relationship with the United States and the upcoming review of the USMCA,” the free trade accord with the US and Canada.

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“The country desperately needs pro-growth/investment reforms and more open policies for oil, gas and electricity, which are undercapitalized and highly unproductive sectors,” said Alberto Ramos, chief Latin America economist at Goldman Sachs Group Inc.

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(Updates to add detail on judicial elections, investment flows in fifth-ninth paragraphs)

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