One of the most serious and least-seen problems facing the Mexican economy is the long-term deterioration of public investment.
The 2026 Budget projects a real growth of 10 percent in the Mexican State’s productive investment.
That’s not bad. But it won’t be nearly enough to offset the declines experienced recently.
This year, through July, a real decline in public sector productive investment has been recorded of 35.7 percent. However, the decline at the end of the year is estimated to be “only” on the order of 10 percent. We’ll see.
If this were the case, the 2026 level, even with the projected growth, would be 1 percent below the 2024 level.
However, the deterioration is evident, above all, when comparing public investment with GDP.
This year, it can be estimated that this proportion will be 2.7 percent, and if forecasts hold true, it will rise to 2.9 percent by 2026.
At the end of Enrique Peña Nieto’s six-year term, this percentage stood at 2.6 percent.
During that six-year term, public investment plummeted, reaching 4.1 percent in the last year of Felipe Calderón’s administration. In 2010, it reached its highest level, at 4.5 percent.
The lack of public investment has resulted in a deterioration of infrastructure and various public services. Poorly maintained roads, hospitals lacking modern equipment, schools with precarious facilities, and drinking water systems unable to meet demand are symptoms of a state that allocates increasingly more resources to current spending, but neglects the investment that should lay the foundations for future development.
The problem is not merely technical or accounting. It reflects the way public finances have been geared toward addressing immediate pressures: the growth of government payroll spending, clientelist social transfers, or the rising costs of pensions and retirements.
In contrast, investment spending has become the adjustment variable whenever public revenues are insufficient. And the truth is that revenue collection in Mexico remains very low compared to international markets. The projected level of 15.1 percent of GDP for public revenues in 2026, which will be the highest in recent years, is far from the OECD average of over 30 percentage points of GDP.
In this context, even if there were political will to increase the investment budget, structural limitations on tax revenues become an almost insurmountable obstacle.
Mexico faces a paradox: more infrastructure is demanded to trigger growth, but at the same time, a tax system remains in place that is incapable of financing that expansion.
And as the margin for borrowing is reduced by the need to maintain macroeconomic stability, the temptation to cut public investment becomes the easiest way out, even if it is the most costly in the long term.
Recent history confirms this. Countries that managed to modernize their economies in a few decades, such as South Korea or Ireland, did so not by reducing state investment, but by expanding it in strategic sectors: energy, transportation, telecommunications, education, and health.
And of course, with a lot of private investment.
On the other hand, Mexico has followed the opposite path: the more the needs of an economy integrated into global trade grew, the less public investment it made, and an environment of distrust for private investment developed.
The result is visible: lagging infrastructure, services that do not meet the demands of a growing urban population, and a loss of competitiveness compared to nations that did invest in state investment.
The conclusion is clear. Without a more ambitious economic growth strategy, there will be no way to reverse the trend.
Public investment will not be able to sustain the growth forecast for 2026 unless accompanied by a faster-growing economy that generates the fiscal resources necessary to finance it.
Talking about modernizing the country requires more than six-year programs with modest increases; it requires a sustained commitment to increasing revenue collection, reorganizing current spending, and, above all, placing growth as a national priority.
If Mexico truly wants to have first-class infrastructure, quality public services, and an economy capable of competing globally, rhetoric and small budget adjustments are not enough.
More economic growth is needed because only in this way will it be possible to generate the resources that will allow the State to become a true engine of modernization.
Source: elfinanciero
