Mexico - August 2026

Mexico’s gross fixed capital formation (GFCF) rebounded in April, breaking a 19-month streak of year-on-year declines that has caused growing concern over the country’s economic model and its future prospects.

GFCF is a key measure of investment that comprises money spent by the public and private sectors on fixed assets such as buildings, railways, and machinery. It recorded a 5.1% annual increase in April, the first year-on-year increase since August 2024, according to figures from the national statistics institute (Inegi) published on 6 July. This was later revised up to 5.2% and followed by another annual rise in May, when GFCF was up 2.4% year-on-year. However, in monthly terms, GFCF was down 0.4% in May, compared to a 4.0% monthly rise in April.

Construction was the main driver of annual growth in April, up 8.8% year-on-year, with residential construction up 16.7% for the period. Investment in machinery and equipment was also up 0.9% on an annual basis. Both public and private sector GFCF increased, by 7.5% and 5.7% respectively. There is no doubt that this and May’s results are a positive development following such a prolonged period of decline, but more is needed to assuage concerns over the direction of travel. 

For example, the fact that April’s growth was driven by construction and machinery can be linked to preparations for the World Cup, a one-off demand boost that doesn’t necessarily indicate a broad-based recovery. In addition, growth in the value of machinery was driven by imports, whereas domestically produced capital goods saw a year-on-year decline. And a cumulative read for January-April this year shows that GFCF was down 1.0% compared to the same period in 2025, according to Inegi, while GFCF was down 0.5% year-on-year between January and May. “Growth in investment in April is good news for Mexico but is still insufficient in order to conclude that there is a sustained recovery in investment flows and investor confidence,” Gabriela Siller, director of economic analysis at Mexican bank Banco Base told local media outlet La Razón in an article published on 7 July.

Investor confidence has been damaged by the uncertainty caused by rapid changes in US trade policy and the renegotiation of the US-Mexico-Canada Agreement (USMCA), but critics argue that Sheinbaum’s policies are not helping. She has reportedly concentrated decision making in the executive branch, brought in price caps on basic goods, and introduced the election of judges by popular vote. There are also wider concerns over legal certainty and public security, according to the Centro de Estudios Económicos del Sector Privado (Ceesp), a Mexico City-based economic think tank. And Luis Rubio, president of think tank México Evalúa, believes that some of these policies are scaring potential investors. “The president understands perfectly that she needs economic growth,” Rubio told British newspaper the Financial Times in an article published 25 July. “There is a huge opportunity but it’s not being taken advantage of because investors and business leaders see these things that simply scare them,” he added. 

Sheinbaum will point to her Plan México development programme as evidence that officials are actively working to attract investment, and the destabilising effects of US trade policy have been clearly evidenced lately, with Washington imposing fresh tariffs even as USMCA negotiations continue. But there is only so long that even those willing to recognise the breadth and difficulty of the challenges facing Sheinbaum can continue to back her current approach.

If future GFCF figures show a return to the previous run of declines, it may be that a radical change is needed to shake things up. One potential candidate, as difficult as it may be, could be a reform to the relationship between the Mexican state and the state-owned oil company Pemex, which has become a drain on national resources in recent years. In fact, credit ratings agency Fitch Ratings has said that persistent financial transfers to Pemex threaten Mexico’s investment grade status. If this pressure continues to mount it may force Sheinbaum’s hand, although she is likely to do everything in her power to avoid making what could be a hugely politically costly decision given many Mexicans’ sense of resource nationalism.