I have been optimistic about Claudia Sheinbaum as the new president. I think she has the personality, intellect and experience to be an strong leader. As I mentioned in a recent column “Claudia Sheinbaum, a case study,” she has an exceptionally difficult task to manage the initiatives begun under fromer President LĂłpez Obrador, contend with a confrontational President-elect Trump, and work with Canada despite its current leadership situation. I have been more than willing to give her the benefit of the doubt so far in her presidency and recent polling with the Mexican population shows that her popularity is higher than ever.
I could go on at length about many of the important initiatives and decisions she has already made. Sheinbaum has managed the Trump and Trudeau relationships well thus far. She has taken a firm and necessary stance in several areas against China. She’s prioritized increasing minimum wage to keep up with inflation. And I like that she has started a pension program for elderly women regardless of if they worked in or out of the home. All great first steps. But this past week has brought a number of flashing red light warning signals on the economic front that concern me. I worry that the economic issues risk becoming much bigger problems if Sheinbaum doesn’t quickly take them head-on. The honeymoon is now over.
The first issue is Mexico’s gross domestic product (GDP) forecast for 2025. Both the World Bank and the United Nations predict Mexico’s GDP will grow 1.5% or less this year. (The United States GDP is projected to grow 2.5%.) Cepal, the Economic Commission for Latin America and the Caribbean, predicts Mexico’s GDP to be at only 1.2% this year. To put that in perspective, every single country in the region except for Cuba and Haiti are expected to have higher GDP growth than Mexico this year. Think about that for a moment, Mexico —  which is hitting record highs of foreign direct investment, record highs of exports, a record share of U.S. imports, record tourist receipts and visitors and record remittances from Mexicans living abroad — is expected to have GDP growth this year similar to two of the slowest-growing economies on the planet.
Experts point to uncertainty from the Trump administration on the possibility of tariffs against Mexico, potential deportations, and concerns around the U.S. taking action against Mexican cartels as reasons for the low projections. All are valid concerns, but every country has their economic headwinds and yet are able to grow faster than 1%!
The second economic red light came with the terrible job creation numbers recently reported for 2024. The Mexican economy nationwide created only 214,000 jobs in the entire year — the worst since 2003 in a non-crisis year. In addition, the number of layoffs in December was the highest in three decades! Businesses clearly are not confident enough to hire right now and many are even reducing headcount.
Another economic red light came with the very sudden announcement this past weekend that Mexicana, the once-bankrupt airline resuscitated by AMLO, cut nearly 50% of its flights without warning after less than a year in business. It was a reminder of how absurd of an idea this was from the very beginning — a military-run, government-owned airline using leased airplanes in a very competitive market.
In business it’s important to always ask, “What problem is my product or service looking to solve?” and clearly that question was never asked with Mexicana. Mexico already has three very agile, competitive, customer-focused, fast-growing national airlines in AeromĂ©xico, Volaris and Viva Aerobus. All three airlines have been rapidly adding capacity — new airplanes and new routes — in response to record customer demand. State-run airlines — outside of a few in the Middle East or China — have tended to not be competitive with private sector airlines. Then again, Cuba has a state-run airline…
Yet another red light came at the beginning of the week with the announcement from Sheinbaum that Mexico’s first electric car, the Olinia, would debut in time for the 2026 World Cup. The project is partly government funded, and has the potential to be the poster child of poor government policy. Mexico has a thriving, world-class auto sector with the top companies from around the world already producing in Mexico or planning to soon. Several companies have announced billion-dollar investments in electric car production in Mexico in just the past year. Why on Earth would the Mexican government think that it can take on the likes of Tesla, BYD and others in electric vehicles?
We all want clean, affordable electric vehicles — but to think that a government-funded manufacturing startup is the best way to get there is pure lunacy. It shows a lack of seriousness of the administration and a complete lack of understanding and appreciation of how the free market works. I cannot help but fear that the Olinia will be the next Saturday Night Live skit as a follow up to “The Adobe.”
The previously mentioned economic red lights, along with many others, are manifesting themselves as they often do, with a rapidly devaluing Mexican peso. In many ways, as I have discussed in previous articles, a weaker peso can in fact be quite good for the Mexican economy. But the speed at which the recent devaluation has occurred, and the sheer amount of the devaluation (25% and counting) is a clear sign that investors are quickly losing faith in the economic agenda of this new administration.
I would never contend that President Sheinbaum has an easy job, or that there are quick fixes, or that she wasn’t dealt a difficult hand by her predecessor. But there are some tangible things she can do in the short term to demonstrate that she is serious about getting the economy growing at the 3-5% rate that it can and should be growing at. One could argue that Mexicana and Olinia are not significant in terms of economic impact, but I think the bigger concern is that it shows a lack of focus of the administration on things that are far more important — like job creation and GDP growth! So here are a few ideas:
- Very publicly acknowledge that 1% GDP growth is NOT acceptable and getting to 3-5% is a top priority.
- Make the politically hard (but financially very easy) decision of shutting down Mexicana airlines to send a strong signal.
- Do not get distracted with Olinia, but rather focus on supporting the automotive private sector with what they need to invest and grow in the country.
- Find ways to fast track investment from the private sector in the energy industry — especially green energy. The world is quickly realizing that the combination of data centers, AI and EVs means increased energy capacity is an urgent priority. Countries that get this right will accelerate, those that don’t will fall behind.
- Go on a very visible “listening tour” with top business leaders in the country. Secretary of Economy Marcelo Ebrard has been visibly doing this, but Sheinbaum has not made it clear that its a priority for her. Mexico has been attracting significant reinvestment foreign direct investment dollars, but new investment has been concerningly low. The administration needs to understand clearly what is needed to accelerate investments and take some tangible steps to work on those needs, ASAP.
- Get the Morena-majority Congress under control and focused on issues that directly impact economic growth.
- Balance the populist messages (many of which are good) with “Mexico is open for business and investment” messages. Populism without economic growth is a recipe for disaster.
A concern voiced by many was that Sheinbaum would end up staying in the shadow of AMLO and focusing on populist issues at the expense of economic growth. Mexico, despite all of its potential, continues to have a perception problem, appearing (to many investors) unable to get out of its own way and seize its economic opportunities. It is critical for President Sheinbaum to demonstrate otherwise quickly before the business and investment community loses its faith in the new administration.
Travis Bembenek is the CEO of Mexico News Daily and has been living, working or playing in Mexico for nearly 30 years.
Travis’s thoughts are spot on. Great observations!
I’ll add one more . Claudia has completely failed to prepare for the US’s mass deportation that’s just 9 days away. No troops sent in mass to the border to help facilitate at least a tad more order, nor to assist the U.S. in its fight against the cartels. Despite the chaos / potential disruption to her own country , she’s done little more than bury her head in the sand. The US can be friend or foe. Claudia’s utter failure to do nothing has the potential to diminish US assistance to bolster Mexico’s economy. The U.S. can be friend or foe. This mis-step may, in itself, may be enough to turn the tide on her present popularity.
the ACLU and other organizations & state sancutuary governments in the US are preparing to file motions to stop much of this. Same as the last time he was the occupant. I suspect that all the bluster will not turn out like the US media would like us to believe.
Sure – making friends (submitting) with the oligarchic , fading empire led by a pathological felon is the answer. Sure.
An excellent article. I would add another area of concern is Pemex. These are about 20 billion dollars of unpaid payments to suppliers. November’s oil production was down. Look for this trend to continue as companies reduce their services to Pemex.
Saludos de el cero de Michoacán. Had to read it twice to digest all of the aspects covered. Can’t really argue about your assessment of the situation. Thanks for getting me thinking on this!
. . . from the author . . . “Find ways to fast track investment from the private sector in the energy industry — especially green energy . . . ” I disagree, expand and improve your extraction of natural gas and oil, refine your output, flood the Mexican market with AFFORADBLE gasoline & gas for homes & business, partner more closely with US oil successes, create “electricity generation hubs” and ATTRACT AI entrepreneurs with a strong reliable source of “cheap” electricy” . . . whatever is “left over” invest in “green energy” options THAT the market VALUES . . . NOT the political swells and “political experts” . . .
PERO, what do i know, I’m not an expert or a swell . . . grins
I work in the oil fields of West Tx, everything here is run by the private sector and everyone makes a very decent profit, including the labor force. Mexicans think that the oil belongs to them. It has never been the case and never will be, it belongs to the politicians and the corrupt oil leadership, sadly the private sector in Mexico can do nothing about that , may God help my beloved brothers and sisters in that beautiful Country !!
Yup, the private energy sector in Texas made a good profit while Texans froze to death.
The economy is not going anywhere because the cartels is involved in just about every aspect of the government. The cartel are the ones’s who are driving the bus. That is what makes the economic situation so “frugal and delicate”. President Scheinbaum is afraid to rattle the features of the cartel, because she knows it will create more violence and possibly more public officials’ assassinations who get in their way. Where is Mexico’s Economic Minister, Marcelo Ebrard who is supposed to create economic growth for the country and reported that Trump “tariffs are just “hollow and don’t mean anything. Nothing is going to happen to the economy. Don’t be too sure Mr Economic Minister?
Optima is spot on!
Excellent article and I agree. I also think Mexico is going to get a lot more expensive over the next 5 years – tolls, taxes, tariffs and inflation are on the rise. I am concerned for the country and its people.
Your seeming dedication to unlimited growth – when that is the problem – is more than curious. No thanks to gentrifying gringos…
We’ll have to see how scared the cartels, who are “involved in just about every aspect of the government” are of the felon and adjudicated rapist in chief and president elon in their posturing and hot air. Seems getting Greenland, the Panama Canal, naming the Gulf of America, and making Canada the 51st state are the big things for yesterday. Time will tell what really happens.
Till then, Mexico should do what’s right for Mexico and tell us Yanks to keep our noses in our own pants.
Please _ The woman dose not have a clue – she was installed by the cartel
Burro
This was a well-written article by someone who is quite wise. I think he’s the owner of the newspaper and he sees things as they are. It is amusing to see the followers who typically write articles in this space join hands with a man who totally disagrees with most of their liberal ideas. And then we have Mr White he’ somehow misses the American election process totally, he still thinks the Democrats are in control but they lost by a landslide. Making false accusations against intelligent people doesn’t win you any points it just makes us see you for what you are. Calling people names and making false accusations just points out the low intelligent people in the world. Mr White would have done well to listen to Rush Limbaugh for a while he could have got an education on American economy and the pride to be an American. But, like I say I have no skin in either game I’m just an observer but I find it I amusing to read some of the things I see.
Not sure how you came up with “lost by a landslide”. Smallest winning percentage since George Bush. Didn’t win a majority of the vote. GOP has the house by the smallest margin since 1931. That is not the definition of a landslide. Face it – the country is evenly divided. And Rush didn’t make people proud to be an American – he was a divider who made lots of money stoking anger. It’s a formula that he started and others have followed.
Oh Juan. You have no clue what Americans do or think I believe. Dems did not loose by a landslide.You need to get with it. And you do have skin in the game. You ridicule anyone calling trump what he is-the first elected convicted felon and adjudicated rapist for our president and an international bully. And I am not a liberal. LMAO. I am a proud conservative who is pissed off that less than 33% of American put him in and were lied to by the GOP that bends over to a man who will not let a beautiful country rule itself-Mexico!
Don’t think winning by 1% is exactly a landslide
Excellent article.
I agree that somehow the bullet must be bitten and continuing to prop up Pemex hurts us in so many ways. It is such an emotional issue for Mexicans – the origination story of little MX putting their Thumb in the Eye of Profiteering Foreigners who have extracted and stolen Mex assets since beginning is truthful and the Expropriation was a powerful symbolic expression- still taught to every little child. It has the symbolic resonance burning the American Flag Does – letting Pemex fail in 2025 would help MX economy- but Emotionally it is the third rail. Burning a USA flag really causes no economic pains- but still drives Us over the hill – like taking a knee during the Nat Anthem. HOW – once something is deemed the Face of Patriotism – do you get that loyalty & emotion changed. But it really must. Taking a knee killed that kid’s career – but continuing to venerate Pemex is an anchor on the neck of a time that MX could move ahead. AMLO wasted that opportunity Covid gave us. But there is still opportunity left with USA business soured on China and extended trade routes. Panama Canal is really in trouble with climate change – a smart Tehuantepec connection could be a real future builder. As for Electricity- plentiful & cheap ? We desperately need. But I wouldn’t rule out renewables- we have a lot of desolate land- just how cheap & quickly can we
produce any type energy by private / knowledgeable people. Maybe Private/public partnerships with Private have total control and 50 year irrevocable contracts. Call it Pemex 2.0 & sell it to the morena public. Just thoughts. Of course with the USA putting an absolutely untrustworthy liar in charge – how can Claudia or anybody really prepare for his next action. Impossible.
I have to agree with you, Travis. Well written and well thought out article. I typically feel that, while she has overseen some initiatives, most have only been extentions of AMLO’s decisions, and that you are too easy on Sheinbaum. I also agree with many of the comments. I don’t think there has been enough thought or effort invested in the ever closer Trump 2.0 era. The world has never seen this version of America. There is a President that will have a Supreme Court that has given him immunity from prosecution. This President has both houses of Congress, well over 50% of citizens agree with, and are holding him to, his bat shit crazy ideology. Every major corporation, including traditionally progressive/democratic leaning organizations are reversing policies as well as donating millions in an effort to avoid the petty tangents of a narcissist with the power to tank their stock value with one tweet. Media companies are settling cases that legal experts say they would win, yet they won’t fight Trump. There are no longer any checks and balances. The moment this President declares something a threat to Democracy, the ACLU and other agencies will not have a snowball’s chance in Hell of winning in the Supreme Court. This is a very different situation from round 1. Yes, some crazy comments are made solely to rile the media, democrats, Mexico, and Canada. The Gulf of Mexico is safe from a name change. Illegal immigrants are not safe. Cartels, regardless of how much blame people want to shift to American addicts and US guns, etc. (Regardless of how true) will be a target. One way or another, there will be action taken and I expect Mexico will be reluctant partner. There is a shit storm coming. None of which will help Mexico’s economy. Many industries are already looking to Vietnam and other Countries for investment. A new Canadian PM joining forces with Trump would will easily roll over Mexico in trade agreements. I love Mexico and spend most of my year enjoying the kind, welcoming people and beautiful country and weather. It pains me to state the obvious, but Mexico doesn’t have the leg it thinks it does to stand on. With growth at the rate of f’n Cuba, Mexico is Trump’s bitch. It’s only been the #1 trade partner for a couple short years, and in that time built a record American deficit. That’s not going to continue under Republican leadership. And it’s not JUST Trump. It is every single up and coming star in the Republican Party. Democratic states are losing populations to traditionally Republican states. Companies, and their taxes, are moving to “red” states. This is a fundamental shift in American politics. I pray for the best, but prepare for the worst. As Mexico and her people are driven into ever greater poverty – how welcome are we Americans, and even Canadians going to be. Mexicans are wonderful and generous hosts, and also a proud people, everyone has a breaking point. If Mexico is declared a threat to America, and travel advisories are placed, travel agents won’t send clients. Families won’t bring their kids and disposable income. Neighbors, coworkers and friends aren’t going to piss off one another and be labeled a traitor or anti patriotic/anti American. How many cars now come with an American flag emblem… and with the 250th birthday next year, how many products will be labeled ” spirit of America” or “proudly American”. Anyone remember 1976. The Red, White, & Blue were painted on everything. With the hatred between the Parties, and the very real possibility of being shot (400,000+ REGISTERED guns in private ownership in America – More than people! Then add all the untraceable and unregistered guns…) for not having the same perception of patriotism, especially fueled by a President who led an insurrection against his own Country and often incites or suggests violence to gain loyalty or compliance to his opinions. God help us.
Your seeming dedication to unlimited growth – when that is the problem – is more than curious.
An excellent article, but the elephant in the room remains Mexico’s educational system. The country’s challenges and progress will ultimately reflect the state of its education. If the government prioritized revamping and investing in the educational system—establishing consistent standards for all students, enforcing accountability, and delivering high-quality education with a focus on math and science—it could cultivate a robust graduating class each year. This, in turn, would address many of Mexico’s long-term issues.
The current disjointed approaches and scattered initiatives fail to provide sustainable solutions. A well-educated generation would be better equipped to tackle emerging challenges. Meanwhile, the government should also address fundamental infrastructure issues, starting with simple but impactful projects like repairing potholes, which cause more damage in minutes than the cost of fixing them. Clean up the garbage, giving the unemployed and hungry something to do. A clean natural environment will help promote order and enthusiasm in moving forward.
The same blablabla based on old traditional financierist views. By misfortune Mexico will suffer the same fate that theirs neighboors precisely because of having attached its economy to them, including the US funded-invented-armed cartels and the lack of ability for diversifying exports to off-shore markets. The difference is, Mexicans are hard working people, either in Mexico, US or Canada, which favor them for surviving the upcoming defeat of the West. Sad fate the one of Mexico: far away from heaven, so close to the US.
I have a hard time understanding why a country with a young and hard working population, excellent natural resources, a climate that supports clean energy and great access to markets can somehow only manage anemic growth, so anemic it can’t even match the growth of an old and mature economy next door.
Then I look at CFE, Pemex, now this lame government airline, billions spent on tourist trains and I begin to understand. Mexico is just another failed socialist attempt at trying to create prosperity through big and corrupt government and high taxes.
The Mexican people deserve better but they won’t get it from the political class here regardless of the party label. The latest, Morena, is a toxic combination of the corrupt PRI and the socialist perpetuators of poverty and stagnation.
This great country is going nowhere with this leadership. Nowhere.
The punishment of Cuba and Venezuela( and by extension anyone who does not fall in line with American exceptionalism) is a great example set by a dying empire.How quickly the corruption on PAN and PRI, lasting almost 90 years, are forgotten. When was it immoral or somehow incompetent to better the lives of your citizens?
The neo- Liberal experiments, started by Reagan and Thatcher, are hopefully over. Morena will focus on the betterment of all Mexicans, not just the rich. The country is in safe hands, with a thinking presidenta, and not an orange-faced buffoon spewing nonsense. But, articles like these, and most mainstream media, are to be expected.
I do not see Mexico offering solutions for American governance; the same courtesy should be applied to them, and all other independent countries. When you deal with your drug-addicted populace, failing infrastructure, massive debt, racism, sub literate population and so much more, you may finally see the light…
Bravo!
Anyone and apparently everyone can complain and does. I think a constructive exercise is target your ideas to solutions that we can debate. We know the problems and challenges and want to hear solutions. Travis is wise and always challenges us with facts and possible remedies. Let’s honor his effort with sol🇨🇦🙏🇲🇽
Surely a gobernment created and financed Olinia is a horrible idea – after all consider the VW Vocho – the people’s car. Oops…