Mexico - March 2026

The killing of Nemesio ‘El Mencho’ Rubén Oseguera Cervantes, the leader of the Cártel Jalisco Nueva Generación (CJNG), during a security operation in February set off a wave of retaliatory cartel attacks that caused much short-term economic damage. However, his death could also lead to a sustained uptick in violence that has a long-term negative impact on Mexico’s economy.

El Mencho was one of the most wanted drug traffickers in the world when he was killed by Mexican security forces in an operation in Jalisco state in the west of the country on 22 February. He had successfully overseen his group’s territorial expansion from its stronghold in the state, building out a presence across vast swathes of Mexico and other countries around the world, as well as diversifying its activities in both the criminal economy, such as fuel theft and mercury smuggling, and legal businesses used to launder the proceeds.

The reach of El Mencho’s organisation was demonstrated in the aftermath of his death, as the CJNG burned vehicles and businesses in several states in the west of the country and set up more than 250 roadblocks in 20 of Mexico’s 32 states. Guadalajara, the Jalisco state capital and a significant tourism and industrial hub, went into a full lockdown as residents were ordered to stay at home, and tourists were stranded in the resort city of Puerto Vallarta as a wave of attacks left businesses and transportation shuttered. 

This made for a significant slowdown in economic activity, with the Confederación de Cámaras Nacionales de Comercio, Servicios y Turismo (Concanaco Servytur) business federation estimating losses of between M$1.5bn and M$2bn (US$85m-114m) for the period 22-25 February. Octavio de la Torre, president of Concanaco Servytur, warned that the fallout from El Mencho’s killing would also have medium-term effects on economic activity and the labour market, with some businesses deciding to close temporarily or open for fewer hours, as well as dealing with disruption to both suppliers and potential clients.

Businesses serving the tourism sector suffered huge disruption, with travellers confined to their rooms and those with bookings either unable to check in due to flight cancellations or likely to have cancelled their trips due to security fears. Japanese automaker Honda suspended operations at a plant in Guadalajara, while other international firms such as French tyremaker Michelin told non-factory staff to work from home, with knock-on effects on both productivity at these companies and a slowdown in economic activity at local businesses where these workers normally spend money. 

Government officials claimed that everything returned to normal just a few days after the operation, with shelter-in-place orders quickly lifted and major transportation hubs reopened, but some argue that the fallout may cause long-lasting damage to both local economies in the worst-affected western states, as well as Mexico more widely. 

For example, the killing of El Mencho may result in a period of heightened violence as his former lieutenants form their own smaller factions and battle for control of the organisation. There is a significant recent precedent here, with two factions of the Cártel de Sinaloa, the CJNG’s main rival, continuing to battle for supremacy following the transfer of leaders Ismael ‘El Mayo’ Zambada García and Joaquín Guzmán López to US custody in July 2024, in a conflict that has involved serious violence resulting in significant economic damage. It is also possible that rival criminal groups attempt to encroach on CJNG territory at a time of perceived weakness, likely resulting in more violence as the criminal map is redrawn. 

A sustained period of heightened violence in Jalisco state would have serious impacts on tourism, which is particularly significant this year as Guadalajara is preparing to host four Fifa World Cup matches in June. Although Fifa president, Gianni Infantino, issued a statement on 25 February claiming he is “not worried” about Guadalajara hosting the matches, and President Claudia Sheinbaum has insisted that visitors will face “no risk” of violence, security fears may discourage football fans from extending their stay to explore Jalisco state, or to travel on to other parts of the country, potentially reducing the economic benefits of hosting the tournament. Persistent violence could also mean that this perception continues after the World Cup itself is over, meaning that tourists stay away from Jalisco state, or even Mexico altogether. 

Ongoing security problems would impact the manufacturing sector, for which Guadalajara has succeeded in becoming a significant hub in recent years, particularly in electronics and semiconductors. A serious downturn in the security situation could affect investment decisions for international firms too, potentially hamstringing the development of the region as an industrial hub. 

On the other hand, parts of Mexico have had striking problems with insecurity for years, and investors have continued to set up shop, drawn by its proximity to the massive US market and its privileged access under the US-Mexico-Canada (USMCA) trade deal. In fact, Mexico received a record US$40.87bn in foreign direct investment (FDI) in 2025, suggesting that many firms are willing to overlook these issues in order to have a presence in the country. 

In conclusion, the economic fallout from the death of El Mencho will depend on various factors, such as how quickly his successor is chosen and the extent to which they are able to exert the same level of control over the organisation as he did. Prolonged wrangling over succession plans, or the arrival of a less capable leader, would increase the probability that the organisation splinters or is more vulnerable to pressure from rivals, raising the risk of persistent violence.

How the CJNG responds to the government attack, and whether Sheinbaum continues to aggressively target the organisation, will also influence the level of state-cartel violence and therefore the economic impact. The CJNG may prefer to quietly concentrate on getting its house in order, limiting violence and economic disruption, or it may decide that a violent confrontation with state forces is necessary to discourage further government attacks against its interests.  For her part Sheinbaum will need to balance a desire to tame the CJNG with the need to maintain a veneer of normality, particularly with the World Cup fast approaching. Her future actions are also likely to depend in part on the degree to which she comes under pressure from US President Donald Trump to combat criminal groups that his administration has designated as foreign terrorist organisations, of which the CJNG is one. El Mencho’s killing may placate Trump for a while, but he will likely ramp up the pressure again in the future. 

Either way, the killing of El Mencho has drawn unwelcome attention to Mexico’s security situation at a time when Sheinbaum is attempting to attract more investment, causing reputational damage and increasing the risk of further economic disruption. Larger firms will be better able to absorb the extra costs, such as more expensive transport and security services, and international investors may conclude that the benefits of operating in Mexico still outweigh the risks, but smaller local businesses and those working informally in sectors such as tourism face serious risks to their livelihoods. This could cause an uptick in the poverty rate in the worst affected areas, presenting political challenges for Sheinbaum and her ruling Movimiento Regeneración Nacional (Morena) party.