Mexico Business Confidence Falls to 39.5%, Near COVID Lows

Business confidence for investment in Mexico has plunged to levels not seen since the COVID-19 pandemic, according to the latest Data Coparmex report. Only 39.5% of companies now consider it a good time to invest, close to the 37% recorded during the 2020 economic crisis, when lockdowns disrupted global supply chains and consumer demand collapsed.

This decline reverses post-pandemic optimism. In 2022 and 2023, confidence exceeded 50% as nearshoring attracted manufacturers from Asia amid US-China trade tensions. Juan José Sierra Álvarez, president, Employers’ Confederation of the Mexican Republic (Coparmex), attributed the slump to a mix of economic uncertainty, insecurity, and political volatility. Investment confidence fell 0.07 percentage points in 1H25 alone, signaling a broader chill in private-sector activity.

“Only 39.5% of companies consider it a good time to invest, a figure similar to the levels we experienced during the pandemic,” Sierra sais during the report's presentation in Mexico City. The survey, covering 3,850 Coparmex members across manufacturing, services, and retail, indicates that businesses are hunkering down rather than expanding.

Primary Obstacles to Growth

Three major barriers are stifling investment:

• Economic Uncertainty (26.1%): Respondents highlighted inflation pressures, fluctuating exchange rates, and fiscal policy shifts as top concerns. Mexico's GDP growth slowed to around 1.5% in 2025, per preliminary INEGI estimates, hampered by global headwinds like US interest rate hikes and softening commodity prices.

• Insecurity (20.4%): Crime's toll has surged, deterring expansion in high-risk areas.

• Political Context (18.4%): Legislative gridlock, especially around judicial reforms, has bred "political noise" that spooks investors.

FDI inflows, which peaked at US$36 billion in 2023, fell 12% in 2025. Sierra warned that mid-course policy changes send “negative signals to international markets,” echoing Moody’s concerns over governance risks. Gabriela Siller, chief economist, Banco Base, described the situation as a “perfect storm,” noting that political polarization post-2024 elections has delayed capital expenditure decisions.

The Financial Toll of Insecurity

Insecurity has surged, surpassing pre-pandemic levels. In 2025, 46.8% of Coparmex members experienced at least one crime, a 15% increase from 2024. Common incidents include merchandise theft, extortion, and vehicle theft, costing an estimated 4% of GDP annually (World Bank).

Extortion alone affects 17.3% of companies, with 68.8% of cases involving telephone threats—roughly 80% traced to prisons. “It is the crime that has thousands of entrepreneurs on their knees,” Sierra said. Firms now divert an average 20% of investment budgets to security, with some states like Guerrero and Michoacán reporting costs exceeding 30% of revenues.

Sector impacts vary: manufacturing suffers transit thefts, while retail faces shoplifting spikes. An INEGI survey found 25% of SMEs considering relocation due to crime, threatening nearshoring gains.

Regional Sentiment and International Outlook

Optimism varies by state: Michoacan, Coahuila, and Veracruz lead, while Queretaro, Chihuahua, and Tamaulipas lag. Internationally, tourism and services offer hope. Mexico will be the “partner country” at Fitur 2026 in Madrid, aiming to attract up to €500 million in deals, surpassing €450 million in 2025. The delegation will promote Acapulco’s Tianguis Turístico, post-hurricane recovery efforts, and tech, mobility, and e-commerce projects. Tourism, contributing 8.5% to GDP pre-COVID, rebounded to 7.2% in 2025 but requires FDI to sustain 4.5 million jobs.

Path Forward: Recommendations for Revival

Coparmex advocates multi-pronged reforms: judicial stability, anti-extortion task forces using AI, and tax incentives for green investments. Sierra stresses public-private dialogue to reduce “political noise” and draws lessons from successful nearshoring hubs like Nuevo León.

Without action, the confidence slump risks a lost decade for investment. Yet, with strategic pivots—leveraging USMCA ties and tourism diplomacy—a rebound remains possible.