Mexico's economy contracts as gross investment drops and informal sector fuels growth

Gross fixed capital formation in Mexico fell 3.5% year‑on‑year in the first quarter of 2026, pulling the investment‑to‑GDP ratio down to 21.9%. The decline came despite President Claudia Sheinbaum’s promotion of the "Plan México", which reported a private‑investment portfolio of $406.8 billion, 2,539 projects and an anticipated 1.63 million jobs. New measures announced in May 2026 aim to speed approvals for strategic private projects and simplify regulatory procedures.

Meanwhile, the Mexican economy recorded a modest 0.7% growth in 2025, but eight of every ten pesos of that increase originated in the informal sector. The sector, which makes up about a quarter of total output, contributed 2.3% growth, outpacing the formal economy. Micro‑businesses expanded 3.3% and freelancers rose 1.1%, with the State of Mexico and Mexico City accounting for over a fifth of informal value‑added. Analysts noted a slowdown in formal investment for 19 months and a 2.5% drop in employer registrations at IMSS in early 2026. “The current economic model is not generating conditions for more productive growth,” said Mireya Pasillas of ITESO.