Health care in Mexico is linked to social-security payments made only by workers in formal employment. The majority of the population works in the informal sector. Those workers used to rely on Seguro Popular, a government-run insurance scheme. Former president Andrés Manuel López Obrador abolished Seguro Popular in 2020, promising a universal, "Nordic" health-care system. His replacement was poorly run and underfunded; he soon scrapped it, leaving no public coverage in its place. The gap made affordable private health care essential.
President Claudia Sheinbaum has promised to improve care for the poorest by hiring more doctors for government-run clinics and providing free medication.
The Institutional Revolutionary Party (PRI) ruled Mexico virtually unopposed for seven decades until 2000. Morena, the ruling party founded by Andrés Manuel López Obrador in 2011, first won power in 2018. Under López Obrador and then Sheinbaum, Morena and its allies have won a supermajority in Congress and control three-quarters of state governorships. Together with its allies, Morena controls 24 of Mexico's 32 states and holds more than two-thirds of the seats in each legislative house. The party has systematically dismantled checks and balances, weakening or eliminating most of the country's independent regulators. With its capture of the judiciary through the June 2025 elections, Morena increasingly resembles the hegemonic PRI of the 20th century.
An anti-nepotism law passed in 2025 barred relatives of politicians from office, seen as a move by Claudia Sheinbaum to sideline López Obrador's allies. Its implementation has been delayed until 2030. Sheinbaum is also working on changes to the electoral system, including cutting public funding for political parties and reducing the number of seats elected through proportional representation. Claudia Sheinbaum's approval rating has not fallen below 70%, though Morena lost several local elections it had expected to win in 2025.
López Obrador doubled the minimum wage in real terms during his six years in office. Between 2014 and 2024 it doubled relative to median pay, from 37% of the middle income to 74%—the most extreme example of a worldwide trend. The minimum wage trebled between 2018 and 2024, to 315 pesos ($18) a day. Claudia Sheinbaum has promised continued double-digit annual increases. Over 13m of Mexico's 132m people were lifted out of poverty between 2018 and 2024, partly through labour reforms including steep rises in the minimum wage and limits on outsourcing. A proposal to cut the working week from 48 to 40 hours is before Congress. Rising minimum wages without corresponding productivity gains risk increasing informal employment.
Mexico was a pioneer of conditional cash transfers in 1997 when it launched Progresa (later renamed Prospera), which gave money to the poorest fifth of households provided children went to school and the family attended health check-ups. School attendance rose, especially among girls; the model endured for two decades across four administrations and was copied from Brazil to Indonesia.
López Obrador scrapped Prospera in 2019, replacing it with universal, largely unconditional programmes. These include a non-contributory pension of 6,200 pesos ($330) every two months for everyone over 65, scholarships for students at all levels, Sembrando Vida (paying rural workers to plant trees) and Jóvenes Construyendo el Futuro (cash for 18-to-29-year-olds doing a one-year apprenticeship).
Poverty as measured by Coneval, the spending watchdog, fell from 42% in 2018 to 36% in 2022, though most of the reduction came through rising wages rather than transfers. Extreme poverty edged up from 7% to 7.1%, partly because universality meant the poorest got a smaller share: the bottom decile received 19% of social spending in 2018 but just 6% in 2020. Research by Susan Parker of the University of Maryland found that school drop-out rates rose after Prospera was scrapped, particularly among boys aged 15-17.
Social programmes absorb around 12% of the federal budget, with nearly 60% of that going to the universal pension, which is constitutionally mandated and will grow as Mexico ages. Health care received less than 1% of the 2025 budget—a third less than in 2024—while Pemex, the state's loss-making oil company, was allocated 5%. In June 2025 the government began dismantling Coneval, which had evaluated programme effectiveness. GDP growth averaged just 0.8% a year between 2018 and 2024.
In 2024 López Obrador pushed through a sweeping reform to replace Mexico's entire judiciary through popular elections—the old system of exams, nominations and appointments was scrapped. Mexico will be the only country in the world to elect all of its judges, from lowly local magistrates to those on the Supreme Court and powerful electoral tribunals. Candidates need only a law degree with good grades, five years of legal experience and five letters of recommendation.
The first round of elections took place on June 1st 2025, covering 850 federal posts (half of all federal judgeships), nine Supreme Court seats, 22 powerful tribunal jobs and thousands of roles in lower courts. A second round in 2027 will fill the remainder. Only a minority of sitting federal judges stood for election; just three of the current 11 Supreme Court justices ran. A study by Julio Ríos of ITAM, a university in Mexico City, found that it took an average of 24 years to become a magistrate under the old system.
Morena controlled two of the three committees that vetted 24,000 candidates in little more than six weeks, with interviews often lasting just a few minutes. Some candidates with known criminal ties got onto the ballot—at least 16 candidates with links to gangs made it onto the lists. A new disciplinary tribunal, also elected from Morena-friendly lists, will help enforce loyalty among the new judges. Critics warn that judicial elections will give drug gangs an easier way to influence the courts, as criminal organisations already field candidates in local elections. Well over 90% of crimes in Mexico go unreported, and just 14% of reports lead to convictions.
Turnout was a paltry 13%, lower even than López Obrador's 2022 presidential-ratification referendum (18%). More than 20% of the ballots cast were spoiled or left blank. Despite the non-partisan framing—candidates were not formally affiliated with parties and political endorsements were banned—Morena operatives circulated "cheat sheets" directing voters to preferred candidates. All nine Supreme Court seats were won by people with links to Morena; the new disciplinary tribunal and electoral tribunal are expected to tilt the same way. None of the sitting justices not originally appointed by López Obrador stood for re-election. Carlos Heredia of CIDE, a university in Mexico City, called the exercise "not an election" but "a designation". The new judges take their seats in September 2025.
Coparmex, the employers' association, said the election would deter investment. The judicial elections may constitute a breach of the USMCA free-trade deal, giving Donald Trump leverage over its forthcoming review.
The only other place where judges are elected to higher courts is Bolivia, where Supreme Court judges have been elected since 2011. The selection mechanism has been a disaster, with two-fifths of voters spoiling their ballots in the most recent judicial election.
Mexico's murder rate peaked at 30 per 100,000 people in 2018; by 2024 it had fallen to 19 per 100,000. The government says the rate has fallen by 32% in the year since Claudia Sheinbaum became president; analysis by The Economist puts the decline at 14%. Counting homicides alone misses the thousands of people who disappear every year; a broader measure including manslaughter, femicide and roughly two-thirds of disappearances shows a more modest decline of 6%. Mexico is on track for about 24,300 murders in 2025—horribly high, but well below the recent annual average of slightly over 30,000. On nearly every other measure besides murder—from extortion to robbery—crime has risen. Well over 90% of crimes go unreported, and just 14% of reports lead to convictions.
The Sinaloa Cartel is Mexico's largest gang; the Jalisco New Generation Cartel (CJNG) is similarly well established nationally. On February 22nd 2026 Mexican special forces killed Nemesio "El Mencho" Oseguera Cervantes, the boss of CJNG, in a raid in Jalisco. The operation, supported by American intelligence, was a triumph for President Claudia Sheinbaum and security minister Omar García Harfuch, but risks provoking a succession fight within CJNG, an amalgam of 92 groups ripe for fragmentation. Gangsters carried out retaliatory attacks in at least 15 states, killing some 60 people. The army deployed 2,500 additional troops to Jalisco. In June 2026 Guadalajara is due to host four matches of the football World Cup, which Mexico is co-hosting with the United States and Canada, raising the political stakes for keeping violence under control.
An internecine war has raged within the Sinaloa gang since late 2024. More than 11,000 federal troops stationed across Sinaloa state have been unable to stop the violence; the murder rate there has tripled since the conflict began. Mexican gangs no longer simply run drugs and smuggle migrants into the United States; they also control or take a cut of legitimate businesses, including avocado-growing, fishing and stalls selling tortillas. Roughly two-thirds of Mexico's murders are linked to organised crime. Crisis Group, a think-tank based in Brussels, has documented local-government officials' collusion with gangsters.
Around 400 of Mexico's 2,469 municipalities lack a local police force altogether. Mexico's spending on security and criminal justice is less than 1% of GDP, the lowest relative to GDP of any country in the OECD. President Claudia Sheinbaum cut security spending by 36% upon taking office; her plan for 2026 allocates less than 1% of the budget to the security ministry, whose funding will fall by roughly 18% from 2025. Since October 2024 the government says it has made 20,000 arrests for serious offences, seized 154 tonnes of illegal drugs and confiscated over 10,000 firearms.
Zacatecas, once Mexico's most violent state, offers a hopeful tale. The murder rate had been falling since a turf war for a migrant-and-drug route peaked in 2021, but over the past year it has fallen more steeply than any other state's. The state has been purging corrupt officers, hiring replacements from other parts of the country, creating special-forces units and imposing a unified command over its most violent municipalities. Police pay has been raised to 16,000 pesos ($870) a month; elsewhere municipal officers still earn as little as a third of that.
Ms Sheinbaum recently went after a fuel-theft ring that had been operating under military protection; 14 people, including a vice-admiral, were arrested. Yet she has done nothing publicly to investigate Morena's Rubén Rocha Moya, Sinaloa's governor, despite credible allegations that he has ties to gangs.
In February 2025 Donald Trump designated Mexican gangs as foreign terrorist organisations and slapped tariffs on Mexican exports, citing the need to stem flows of migrants and fentanyl. The Pentagon has tripled the number of active-duty troops on the American side of the border and deployed drones, spy-planes and armoured cars. The Trump administration has been making plea deals with members of the Sinaloa Cartel without the knowledge of Mexico's government, and has revoked visas of Mexican officials suspected of colluding with gangsters.
Japan's was the first East Asian culture to find fans in Mexico, beginning when dubbed anime shows started airing on Mexican television in the late 1970s. In the 1990s Japan's government pushed culture as a form of soft power, coinciding with the liberalisation of Mexico's economy and the privatisation of state broadcasters. Mexican dubbing studios became regional hubs for adapting anime for Latin American audiences. Nissan opened its first assembly plant in Aguascalientes in 1992; the city is now home to a large Japanese community. Japan and Mexico have had a free-trade agreement since 2005. In 2024 a record 150,000 Mexicans flew to Japan, up 60% from 2023—the fastest year-on-year growth of any country.
South Korean culture has become, if anything, even more popular. The number of Mexicans enamoured of hallyu, the wave of Korean culture, is estimated to have jumped from 6.7m in 2023 to more than 11m in 2024. Korean-language courses are heavily oversubscribed. South Korea and Mexico are exploring new trade ties.
Mexico has become America's largest trading partner, benefiting from the "nearshoring" of supply chains as American businesses reduce reliance on China. Trade in high-tech products is booming. Foreign direct investment grew in 2025 even as it fell in other emerging markets. Exports grew by 7.6% in 2025, leading to Mexico's first trade surplus since 2020.
Yet the economy is limping. GDP expanded by just 0.8% in 2025—the slowest growth of any large Latin American economy and Mexico's worst rate since the pandemic—after averaging annual growth of only about 2% over the past three decades. Income per person has slid back to its 2017 level. Investment fell by 6.6% in 2025; public investment alone plunged by 28%, the steepest drop in over three decades, as the government slashed construction spending. Vehicle exports fell by 2.7% in 2025. Mexico lost 130,000 formal manufacturing jobs that year.
About 55% of workers are informal, engaged in low-tech, unproductive jobs. Many business owners stay off the books to avoid registering employees and the attendant costs: mandated minimum wages, social-security contributions and tax compliance. As a result, the productivity of Mexican workers is roughly one-third of that in the United States. Morena raised the minimum wage from 37% of the median in 2014 to over 75%, easing poverty but acting as a brake on formalisation and growth. Mexico's tax revenue as a share of GDP is the lowest in the OECD; rather than pursue tax reform, Claudia Sheinbaum's government has chased large firms for unpaid tax bills calculated retroactively.
The unreliable supply of electricity constrains growth. CFE, the state utility, plans to spend $29bn cumulatively on electricity generation and transmission by 2030, but the government cannot foot the bill. The fiscal deficit was 5.7% of GDP in 2024, the highest in 36 years. The 2026 budget of 10.2trn pesos ($570bn) is largely consumed by pensions, social programmes, debt service and mandatory transfers. A new framework for "mixed contracts", published in January 2026, gives private firms a way to invest alongside CFE.
Plan México, Sheinbaum's six-year economic strategy, aims to push Mexico into the top ten largest economies by 2030, with investment reaching 28% of GDP and 1.5m new manufacturing jobs. All this appears out of reach: the economy would need to outgrow peers by 4% annually, and in 2025 investment reached just 22% of GDP, short of even its 25% interim target. Sheinbaum has promised to bring the deficit back to 2.5% but has so far missed her own short-term targets.
Some 85% of Mexico's exports go to the United States, making it acutely vulnerable to American tariffs. Nearly every South American country, by contrast, now trades more with China than with the United States. The USMCA, a trade deal negotiated by Donald Trump in his first term to replace NAFTA, shields most Mexican exports from tariffs. Its first formal review is due on July 1st 2026.
In September 2025 Mexico imposed tariffs of 20–50% on 1,463 products from countries with which it has no free-trade deal. Chinese cars, which in 2024 accounted for 20% of new cars sold in Mexico, up from under 1% in 2017, are subject to a 50% tariff. Mexico has also drawn up a screening mechanism for foreign direct investment and passed it to American officials to review.
Constitutional changes made by Morena have entrenched the controlling role of the state in the energy system, locking out badly needed private capital even as government debt soars. A new model introduced in 2026 allows private firms to take minority stakes in state-run energy projects—a welcome start, but far short of what is needed.
Natural gas accounts for more than 60% of Mexico's electricity generation, largely in combined-cycle plants run by CFE, the state electricity firm. Last year Mexico imported 2.34trn cubic feet of natural gas from the United States, up by nearly 40% from 2018, absorbing about 70% of America's pipeline gas exports. The dependence is mutual.
Mexico has storage capacity for just over two days of gas demand. By contrast, Spain can hold about 30 days' worth; France more than 100. When supply faltered during a freeze in Texas in 2021, Mexican factories and homes went dark within hours.
Renewables contributed only 22% of electricity generation last year, falling short of the target of 35%, despite the US Department of Energy's estimate that Mexico has the potential to produce enough renewable energy to meet its electricity needs one hundred times over. Reliance on cheap gas has curtailed the development of new renewable energy.
Pemex, the state oil firm, is the world's most indebted state oil company, with obligations topping $100bn. Oil production peaked in 2004 at 3.4m barrels per day and has since fallen to about 1.6m.
In 1997, when Farmacias Similares opened its first shop, prescription drugs cost twice as much in Mexico as elsewhere in Latin America. Generic medicines were not available. Today, after the firm's campaign to sell generics, medicines in Mexico are among the cheapest in Latin America.
You single-handedly fought your way into this hopeless mess.