A new era of political leadership
Claudia Sheinbaum made history when she took office as Mexico’s first female president, and the first Jewish head of state in the country’s history. Claudia Sheinbaum is a Mexican politician and environmental engineer who currently serves as the President of Mexico, and she is the first woman and the first Jewish person to be elected to the post, having previously served as mayor of Mexico City from 2018 to 2023. She won her mandate decisively, and her six year term formally began on October 1, 2024.
Nearly two years into the job, her popularity has cooled but remains solid by regional standards. Mexican President Claudia Sheinbaum remains popular, but her favorability has dropped to 64%, and views of the economy and democracy are also declining. Notably, around two-thirds of Mexican adults have a favorable opinion of Sheinbaum, down from 83% last year. Mexicans still give her strong marks in some areas, since most approve of her handling of education, the economy, and relations with the United States, though more disapprove than approve of her efforts to fight organized crime and corruption.
Nearshoring and the shifting economy
The word everyone in Mexican business circles keeps repeating is nearshoring, the trend of companies moving supply chains closer to the United States rather than relying on distant factories in Asia. The logic is straightforward: a truck can cross the northern border in two days, while shipping from Asia can take over a month, and Mexican goods enter the United States largely tariff free under USMCA rules while Chinese imports face steep duties. USMCA-compliant Mexican goods enter the United States at effectively zero tariff while Chinese imports face average US tariffs near 57.6%, Mexican assembly labour costs less than China’s, and a truck crosses the border in two days against 36 days by sea from Asia.
That structural advantage has translated into real money flowing into the country. Mexico’s GDP grew just 0.8% in 2025, a fourth straight year of deceleration, while FDI hit a record $40.87 billion, up 10.8% year-on-year, driven by nearshoring in automotive, semiconductors, and industrial manufacturing. Growth forecasts for 2026 vary depending on who you ask, though most cluster in a modest range. The Bank of Mexico raised its 2026 GDP forecast to 1.6% in February, up from a prior estimate of 1.1%, while the IMF maintained a 1.5% forecast in its January World Economic Outlook, and the OECD projects 1.3 to 1.4% expansion.
Trade ties and the USMCA review
No single event looms larger over Mexico’s economic future this year than the scheduled review of the trade pact that binds it to the United States and Canada. The USMCA joint review convenes July 1, 2026, the most consequential near-term event for Mexico’s economy, with roughly $873 billion in annual bilateral goods trade at stake. The stakes are high enough that Mexican officials have been quietly recalibrating industrial policy around the possibility of renegotiated terms.
Compliance data suggests exporters have already adapted to the current framework rather aggressively. The share of Mexican exports actually qualifying for USMCA terms surged from roughly 45% to 89% in a single year. That shift shows a manufacturing base racing to lock in the benefits of the agreement before any changes take effect, a sensible bet given how much of the country’s export economy depends on frictionless access north of the border.
Security, cartels, and a complicated peace
Security remains the most sensitive topic in any honest conversation about Mexico. The headline numbers have genuinely improved, with Mexico recording one of its sharpest declines in lethal violence in recent years, homicides falling 22.7% over the past year while overall peace levels improved by 5.1%, according to the 2026 Peace Index. Officials point to this as validation of a new security strategy, and Sheinbaum’s government points to falling homicides as evidence that its strategy is working, reporting that the daily murder rate dropped by 37 percent between September 2024 and the end of 2025.
Yet the picture underneath those numbers is messier. Researchers behind the Peace Index warned that the decline in killings should not be mistaken for a comprehensive stabilization of Mexico’s security environment, noting that structural risks threatening the sustainability of these advances persist. One notable development came in February 2026, when Mexican security forces killed Nemesio Rubén Oseguera Cervantes, known as El Mencho, the leader of the Jalisco New Generation Cartel, with help from US agencies. That operation triggered its own wave of retaliatory violence, a reminder that fewer homicides do not necessarily mean a quieter country.
The World Cup effect and tourism boom
Summer 2026 gave Mexico a rare moment in the global spotlight. Mexico hosted 13 of the tournament’s 104 matches, making history as the first country to host three World Cups following its 1970 and 1986 tournaments. The tourism payoff was substantial and, in some ways, exceeded expectations.
Across the five week tournament window, about 3 million foreign tourists visited Mexico’s three World Cup host cities between June 8 and July 12, and Mexico City, Guadalajara, and Monterrey recorded 7.5 million visits, exceeding the pre-tournament estimate of 5.5 million, with tourism spending hitting 39.7 billion pesos, or 2.1 billion dollars, and average hotel occupancy rising 12% compared to the same period in 2025. Interestingly, foreign visitors made up a much larger share than usual, since of those 7.5 million trips, 40% were made by foreigners, a high share for a country where most tourism is usually local. Officials are now trying to convert that short term surge into something more lasting, with the tourism ministry coordinating post tournament marketing campaigns aimed at keeping visitors coming back.
Pemex, energy, and fiscal pressure
Behind the growth headlines sits a less glamorous story involving the state oil company and the government’s balance sheet. General government debt crossed 60% of GDP for the first time in over 20 years, Pemex carries $84.5 billion in financial debt at 12.3x leverage, and Brent above $100 per barrel is pushing fuel subsidy costs and threatening to widen the fiscal deficit beyond 4.1% of GDP. This is a meaningful shift for a country that historically prided itself on relatively conservative public finances.
Pemex’s debt burden, while still painful, has actually eased somewhat from its worst point. Pemex’s financial debt stood at $84.5 billion at end-2025, down from a $113.2 billion peak in 2020, but at a leverage ratio of 12.32x EBITDA. The company still faces a wall of near term obligations, since Pemex faces $13 billion in debt maturities in 2026 alone, and the government transferred roughly $14 billion to it this year, nearly double 2025 transfers. Keeping the national oil company afloat has become one of the quiet, ongoing burdens on Mexico’s public finances.
Migration and the relationship with the United States
Mexico’s relationship with its northern neighbor has rarely felt simple, and the current moment is no exception. Sheinbaum took office facing direct pressure from Washington, since she began her first full year in office with pressure from all sides, as Donald Trump, then the U.S. President-elect, had threatened to slap tariffs on Mexico and launch American military strikes into its territory. That tension has not fully dissipated, and it has occasionally escalated into public disagreements over how far US involvement in fighting cartels should go.
By early 2026, the disagreement had become explicit. President Trump signaled US ground operations in Mexico to target drug cartels, saying US forces would start hitting land in Mexico, following months of naval strikes against narcoboats, while Sheinbaum expressed opposition to this move. Despite these frictions, the two governments have continued to cooperate on specific security operations, and economic ties remain deeply intertwined given how much of Mexico’s export economy depends on US demand.
Culture, gastronomy, and everyday life
Beyond politics and trade statistics, Mexico’s cultural pull continues to grow on the world stage. The World Cup gave the country an unusual platform to showcase this, with venues like the Yancuic Museum, the Museum of Mexico City, and the Dolores Olmedo Museum becoming showcases of national identity, exploring football through archaeology, fashion, contemporary art, and nostalgia. Mexico City in particular leaned into its unique status, since it is described as the only metropolis on the planet to host three FIFA World Cups, in 1970, 1986, and 2026.
The everyday texture of Mexican life, from street markets to regional cuisine to the rhythms of daily commerce, remains one of the country’s most durable draws for visitors and a source of quiet pride for residents. Cities outside the World Cup spotlight, from Oaxaca to Mérida, continue building their own tourism identities around food, colonial architecture, and craft traditions. This cultural depth is part of why so many visitors who arrive for one reason end up staying longer or returning for another, turning single trips into recurring relationships with the country.
Looking ahead: challenges and opportunities
Mexico’s government has staked its economic strategy on an ambitious industrial policy known as Plan México, aiming to reshape the country’s manufacturing base well beyond the traditional border states. The plan’s operational core involves the Polos de Desarrollo Económico para el Bienestar, or Podecobi, 15 industrial development hubs spread across states that have historically been bypassed by nearshoring concentrated in northern border corridors. Sheinbaum inaugurated the first of these hubs in April 2026, when she opened the first Polo in Huamantla, Tlaxcala, a 53 hectare site representing $540 million in investment designed to generate over 6,000 direct and indirect jobs.
Whether this translates into broad based prosperity is still an open question, and independent researchers have already flagged a troubling gap between investment headlines and job creation. Independent analysts found manufacturing employment fell by 127,200 in 2025 even as export values rose. The ambition behind Plan México is real, with a stated target of a top-10 global economy by 2030, 1.5 million specialised manufacturing jobs, a 5.6 trillion peso infrastructure commitment, and the 15 development hubs aimed at states the nearshoring wave bypassed. Closing the distance between that ambition and the actual numbers on the ground will likely define how ‘s economic story is judged over the next several years.