Mexico

Modest rebound amidst enduring uncertainty

Growth is set to recover slowly in 2026 from virtual stagnation in 2025. In the wake of the trade war launched by the Trump administration, Mexico’s bet on a growth model built to service the US market and on attracting nearshoring investment is looking like a double-edged sword. USMCA membership has so far granted Mexican exports a strong degree of protection from tariffs (see the exemption on Section 232 tariffs on cars and car parts, and IEEPA tariffs). However, the investment boom experienced in 2022-2023 had been predicated on the assumption of long-term preferential market access to the US. Lifting of uncertainty will depend on how the 2026 USMCA review unfolds. For the moment, investors have reacted with a wait-and-see attitude, reducing since 2023 the level of new FDI flows but increasing reinvestment flows, resulting in broadly stable aggregate. We expect this trend to persist until we get a clearer picture of the long-term situation with the US.

Domestic CAPEX and non-residential investment are expected to recover only weakly, while lower interest rates should support residential investment. Automotive exports declined by 4% YoY in H1 2025. However, electronics exports have taken off to fill the gap, benefiting from the A.I. infrastructure spending boom in the US. If tariffs fail to escalate, exports will have room to grow, as demand from the US is expected to hold. Though the manufacturing sector is shedding workers, the trade/uncertainty shock is showing little evidence of spilling over to the general labour market (unemployment at 3% as at September 2025) and domestic demand. Despite moderating wage growth, stable fiscal transfers and improving consumer confidence should lead to a modest rebound in consumption. Service sector activity should therefore continue posting modest growth. 2026 should be the first year when the effects of the US immigration crackdown become fully visible, creating a downside risk to consumption in the form of weaker remittance flows (3.7% of GDP). Despite somewhat sticky core inflation, the overall context remains disinflationary, and the central bank should continue cutting in the direction of 7%.

External vulnerabilities under control, a challenging return to fiscal discipline

Fiscal deficits like the one that was run in 2024 on the back of pre-election spending send out a worrying signal for a country a mere one downgrade away from losing investment grade status. The Sheinbaum administration was surprisingly successful in achieving fiscal consolidation in 2025, but that progress is expected to stall in 2026. Social transfers will continue to be strongly prioritised, along with infrastructure spending and defence and security. This last category faces the risk of unexpected expenses related to sudden demands from the US government to tighten migratory controls and operations against organised crime. We are skeptical of the government’s assumptions regarding nominal growth, the revenue-raising potential of Mexico’s tariffs on non-FTA countries and measures to improve collection and the capacity to phase-out commitments to the Oil SOE, PEMEX. Hence, the 4.1% of GDP 2026 deficit target seems somewhat optimistic. Given Mexico’s highly volatile external environment, this means a noteworthy – but not imminent – level of fiscal vulnerability. Restoration of a healthy fiscal path will hinge heavily on the success of Plan Mexico, Sheinbaum’s flagship industrial policy plan. The 6-year package aims to incentivise USD 277 billion in foreign investment (automotive, aerospace, semiconductors, electronics, and pharmaceuticals) by 2030, but its heavy reliance on tax incentives means it can lead to cost overshooting. Similarly, it remains to be seen how successful the efforts to restore Pemex’s operational profitability will be. The public oil giant represents a contingent liability on the order of 6% of GDP.

We should continue to see a gradual deepening of the current account deficit, driven mostly by a larger merchandise deficit. Reduced remittance inflows will result in a weakening of the secondary income surplus (3.5% of GDP). Though growth in net FDI inflows (1.5% of GDP) has disappointed, it does not show signs of collapsing, sustained mainly by profit reinvestments. The funding composition of the current account therefore leans stable. FX reserves cover four months of imports, external debt is relatively low (26% of GDP, one-third of it being private sector debt) and its service backed by an IMF flexible credit line arrangement (1.4% of GDP) up for renewal in end-2027.

Business climate under pressure from institutional reforms and trade uncertainty

The leftist Morena party consolidated its rule in the 2024 general elections, securing the presidency with 61% of the popular vote and a de facto supermajority in Congress. President Claudia Sheinbaum succeeds her still-influential mentor, Andres Manuel Lopez Obrador, and will continue implementing an agenda based on state-led economic development, reducing poverty/inequality through welfare and redistribution, and institutional reforms. Notable among these is the constitutional amendment to elect judges by popular vote, which allowed Morena-aligned magistrates to dominate the June 2025 elections where half the seats were in play. Critics of the reform emphasise the risk of erosion of judicial independence, which may undermine business interests where they conflict with those of public authorities, or create openings for corruption. Similarly, formerly independent regulatory agencies have been placed under the auspices of cabinet members, including the energy, telecoms and competition authorities. The state’s priority role in the energy sector (exploration, processing and distribution, including electricity) will continue to be defended. The pervasiveness of crime is increasingly becoming a business hazard, as it often interferes with everyday operations and forces firms to incur insurance and security costs. Sheinbaum is expected to serve a full mandate, ending in 2030, while all seats in the Chamber of Deputies (the lower house) will be up for election in 2027. Though her approval ratings have remained high, they have suffered somewhat in the wake of high-profile corruption scandals involving Morena officials. Simmering tensions within the party flare up from time to time but should not escalate into outright faction infighting as long as Sheinbaum’s personal popularity remains strong.

The upcoming USMCA review will be determinant in shaping the business environment in years to come. Our working assumption is that the agreement will survive the 2026 review, though it is harder to say if in the form of a full extension (from 2036 to 2042) or subject to another revision in 2027. Energy sector liberalisation is likely to be a significant point of contention. Despite some overtures to private sector involvement, Morena overall continues to support state dominance at all levels of the energy supply chain, while the US is likely to push for more openness to private foreign capital. Other likely demands such as tighter rules of origin (including higher US content) and more demanding labour standards can erode some of Mexico’s comparative advantages. Under the industrial policy initiative “Plan Mexico”, the government has sought to introduce further nearshoring incentives (amortisation expensing and other tax breaks, national origin requirements for public procurement), but clarification and stabilisation of the US trade relationship will be necessary to meaningfully restore nearshoring momentum. Mexico-China trade will continue to be a casualty of the trade war, as shown by the tariffs introduced in the 2026 budget covering an estimated 8% of imports.

Payment

Debts are commonly paid in Mexico by cheques, wire transfers and – in some special cases – credit cards. Corporate payment processes are governed by companies’ internal policies. Most companies request supporting documentation from the other party before proceeding with a transaction (e.g. the company’s articles of incorporation, or its tax identification, known as the Registro Federal de Contribuyentes). The documents most frequently related to commercial transaction are invoices, promissory notes, and cheques. Promissory notes are unconditional promises, in writing, to pay a person a sum of money. In Mexico, this document is normally used as a guarantee of payment from the buyer. It is signed by the legal representative of the buyer – and hence, the debtor – for an amount which is superior to the total amount of the debt. Promissory notes and cheques also serve as certificates of indebtedness. Once buyers possess the relevant information, they can proceed to make payments by wire transfer or cheque, with both methods taking approximately ten to fifteen working days. Wire transfers are more common, as cheques can be post-dated, thus presenting the risk that buyers will issue cheques that they cannot finance.

Debt Collection

INVOICES

In terms of debt collection, original invoices act as proof of the acceptance of the debt and the establishment of a commercial relationship between the parties. According to commercial and civil laws, the commercial agreement is sealed by two elements: an object (in this case the product or the service), and the price of the object as agreed by the parties. Even in the absence of a written agreement, an invoice provides both of these elements. Invoices are therefore the most effective form of proof in a lawsuit situation, as they show that the parties made a sale agreement and have a reciprocal obligation to pay the price agreed and to deliver the goods or provide the service.

In 2014, the Mexican Tax Authorities (Servicio de Administraci Servicio de Administración Tributaria) ruled that all invoices must be electronic, with an XML file. They must also be verified by the tax authority system in order to be validated. The tax authority also requests electronic confirmation when the creditor receives payment, along with a receipt in an XML file as legal confirmation. These new requirements entered into force in December 2017. The goal of these changes is to limit the amount of fraud cases and ghost companies, both of which are prevalent in Mexico.

Amicable phase

Before entering into legal proceedings in Mexico, creditors normally attempt to contact their debtors via telephone. A written letter is sent to the debtor, in which the debtor is notified of the amount of the debt and the creditor’s intentions to negotiate payment?terms, other steps include a visit to the debtor by a collection specialist. During this visit, the collection specialist will attempt to develop a more detailed perspective on the debtor’s situation. The specialist will endeavour to ascertain if the company is still in business and if it has assets (such as real estate, merchandise or other rights) that could be seized in the event of a legal process.

When creditors initiate collection actions with an amicable phase, it is common for debtor companies to disappear altogether. This means the discontinuation of commercial activities that could potentially enable the payment of sums due.

When entering into commercial export relationships, companies are advised to ensure that all documentation conforms to Mexican law. A lack of correct information and documentation opens exporters up to the possibility of fraud committed by Mexican companies and reduces the likelihood of successful debt recovery during the amicable phase.

Legal proceedings

The Medios Preparatorios a Juicio Ejecutivo Mercantil is a pre-legal process takes place when there is an invoice as a proof of the pending payment and of the commercial relationship. Creditors request that the judge obtains a citation from the debtor or its legal representative. He then obtains the confession and acceptance of debt from the debtor, as well as the pending payment. As the confession before the judge is an executive document, the creditor is then able to initiate the Summary Business Proceeding legal process. This pre-legal process takes approximately two or three months. There are subsequently three types of proceedings that can be initiated against debtors:

SUMMARY BUSINESS PROCEEDING

This legal process takes place when there is a Certificate of Indebtedness (promissory notes, cheques or legal confessions before the judge by the debtor or its legal representative). The process begins with the phase of citation, when the creditor initiates the lawsuit by requesting that the debtor pays the total amount of the debt due. If the debtor does not have sufficient funds, the creditor can request that some of its assets be seized. These assets can include real estate, merchandise, bank accounts, industrial property rights and trademarks, to be used as a guarantee against the total amount of the debt. Once the assets are seized as a guarantee of the debt, the legal process continues until the judge renders his final resolution. Then, if there is no negotiation or payment, the creditor can initiate the auction of assets to recover the debt. This legal process takes approximately six to eighteen months, although this can vary from case to case.

ORDINARY BUSINESS PROCEEDING

Ordinary Business Proceedings are the most time consuming procedure in Mexican commercial law. They can take place in the absence of a Certificate of Indebtedness, which means that the only proof of a commercial sale between the parties is the commercial agreement with invoices. In this type of process, assets can only be seized as a guarantee of the total amount of the debt when the judge has rendered his final sentence condemning the debtor to make payment. This legal process takes approximately one to two years.

ORAL PROCEEDINGS

Oral proceedings take place when the total amount of the debt does not exceed EUR 31,856.68. As with Ordinary Business Proceedings, assets can only be seized as a guarantee of the total amount of the debt when the judge has rendered his final judgment condemning the debtor to pay the amount due. This process takes approximately four to six months. On May 2, 2017, Mexican congress made a modification which ruled that all commercial disputes be processed through Oral Proceedings, with no limitations on amounts, with effect from January 25, 2018.

Enforcement of a Legal Decision

A judgment is enforceable as soon as it becomes final. If the debtor does not comply with the judgment, the creditor can request a mandatory enforcement order from the court, in the form of an attachment order, sale of specific assets, or liquidation of the company. This takes between six months to two years.

Foreign judgments can be enforced through exequatur proceedings. The court will verify that certain requirements are fulfilled, prior to recognising the foreign decision. The court establishes whether the foreign court had jurisdiction to decide on the issue and whether enforcing the decision will not conflict with Mexican law or public policy.

Insolvency Proceedings

OUT OF COURT PROCEEDINGS

With the approval of creditors holding 40% of the debt, debtors can constitute a “pre-packaged” reorganisation agreement. This enables the court to issue an insolvency declaration and declare the company in concurso mercantile.

LIQUIDATION

Liquidation can only be requested by the debtor itself, but the debtor can be placed into liquidation as a result of its failure to submit an acceptable debt restructuration proposal to its creditors through the concurso mercantile proceedings. A liquidator is appointed and given the responsibility for managing the company, selling its assets and distributing the proceeds to the creditors according to their rank.

Last updated: 20 November 2025