Mexico’s Public Investment Slumps 28.4% in 2025

A new report from the Ministry of Finance and Public Credit (SHCP) shows that Mexico’s public investment plunged 28.4% in real terms in 2025, the steepest decline in decades, as fiscal consolidation focused on cutting capital spending. Infrastructure-related saw some of the largest contractions, reducing physical investment to historic lows within public finances. Analysts warn the signal of reduced infrastructure commitment may further weaken investor confidence and long-term growth.

Mexico’s public investment saw its steepest decline in decades in 2025, as fiscal consolidation efforts leaned heavily on cutting capital outlays, deepening concerns about the country’s medium-term growth capacity and the state of core infrastructure.

Full-year data shows that physical investment, a key proxy for public investment in the public-sector financial balance, fell 28.4% in real terms in 2025, the sharpest annual drop on record in available series, cited as the largest since 1990.

In level terms, year-end reporting places 2025 physical investment at roughly MX$770 billion (US$44.24 billion) (real figures at December 2025 prices), underscoring how sharply infrastructure-linked spending contracted compared with recent years.

According to Banco Base, the reduction was concentrated in infrastructure tied to economic activity. Within the year-end breakdown, the steepest contractions were reported in:

• Communications (down 62.3% real)

• Transportation (down 44.6% real)

• Economic, commercial, and labor affairs (down 50.7% real) 

As a result, physical investment’s weight within public finances fell to historic lows. It was equivalent to 9.4% of budgetary revenues, and its share of total spending also dropped to a minimum, reflecting a shift toward more rigid expenditure items such as debt service.

Finamex Warns the “Signal” Matters More Than the Size of the Cut

Víctor Gómez, Director of Economic Analysis, Finamex, argues that the infrastructure story is structural rather than cyclical, reports Expansión. “The infrastructure issue is much longer-term… Mexico entered… a consolidation process starting in 2015,” he says, adding that the public-sector cut matters less “in magnitude” than in the signal it sends about investment certainty in infrastructure.

Gómez also points to a significant backlog in productive infrastructure, noting that execution has skewed toward large flagship projects while leaving gaps in the logistics backbone: road freight, ports, airports, and urban mobility. “Mexico has a significant backlog in investment in productive infrastructure,” he says, warning that this mix of factors limits Mexico’s long-term potential growth and requires reversing elements that undermine confidence so growth can recover.

Mexico’s medium-term growth outlook has deteriorated compared with prior decades, says Gómez. GDP grew 2.3% on average between 2000 and 2018, while the forward-looking expectation is around 1.6%-1.8%. He links that downgrade to weaker pro-competition regulatory frameworks in sectors such as energy and telecoms, lower legal certainty tied to changes around the judiciary, and lower public investment in infrastructure.

SHCP’s 2026–2030 Plan

At the start of February, the Ministry of Finance and Public Credit (SHCP) unveiled the Infrastructure Investment Plan for Development With well-being 2026–2030, aiming to mobilize MX$5.6 trillion (US$323.12 billion) in public and mixed investment, MBN reports. This investment is distributed across eight strategic sectors: energy, rail, roads, ports, health, water, education, and airports.

The plan’s rollout has been framed as an attempt to restore momentum after the sharp 2025 contraction in physical investment, and to position infrastructure as a lever for growth under the government’s broader “Plan México” agenda.

HR Ratings says that, beyond what is already budgeted, SHCP’s Infrastructure Investment Plan, envisions allocating an additional MX$722 billion (US$41.48 billion) in 2026 (about 2.0% of GDP) for projects across energy, rail, roads, ports, health, water, education, and airports. The ratings agency notes that the government is seeking a mixed-investment structure, with part of the resources provided by the public sector and part by the private sector, though the specific mechanisms have not yet been detailed.

HR Ratings argues that if the plan materializes, Mexico’s gross fixed capital formation could approach 26% of GDP, a historically high level; it highlights that in the last 30 years, investment has exceeded 25% of GDP only three times: 2008, 2012, and 2024.

Authorities play a key role in investment. Beyond the amounts, government action as a promoter can help reduce fear and uncertainty that hold back private capital, says Gómez. However, he cautions that the plan alone may not be sufficient, stressing the need to strengthen institutional execution and confidence-building within the existing legal framework, and to accelerate implementation given the investment slowdown observed over the past two years.