Mexico: An Overview

Introduction and USMCA

Mexico continues to face significant hurdles and challenges. Following the tendency during the past few years, Mexico’s economic growth in 2025 was minimal.

The US trade and tariff policies have affected investment decisions in Mexico, particularly those that contemplate exports into the United States. The effects of the most recent decision to not renew the United States–Mexico–Canada Free Trade Agreement (USMCA), but rather maintain its term until 2036, with annual reviews, are yet to be assessed, together with the results of the ongoing negotiations for 2026 on key aspects for each country. An agreement of the magnitude of the USMCA must be grounded on long-term certainty. Ripping that apart with mechanisms that may change the USMCA every year in the largest economic region in the world will slow investment flow into Mexico. Negotiation sectors under the USMCA for this year are expected to cover car manufacturing, steel and copper trade, digital payments and transportation.

While moving at a slow pace, it remains encouraging that governmental plans have placed an emphasis on attracting investment in electricity, renewable energies, infrastructure, telecommunications, ports, highways, technology, and access to banking and financial markets. The foregoing shall continue to foster increased co-operation between the United States and Mexico and between the private and public sector; however, timing, proactivity and legal certainty are of the essence.

The M&A market has been active and, except for companies considered crown-jewels, there has been a repricing of Mexican companies, which favours purchasers.

Energy and Infrastructure

In February 2026, Mexico presented the Infrastructure Investment Plan for Development with Well-Being 2026–2030 (the “Plan”) with guidelines and objectives of the Federal government’s infrastructure strategy. The Plan’s priority sectors include energy, railways, highways, ports, healthcare, water, education and airports. The Plan was followed by the enactment, in April 2026, of the Law for the Promotion of Investment in Strategic Infrastructure for Development with Well-Being (the “Law”). The Law establishes a new legal framework to promote long-term investment in strategic infrastructure projects through joint participation structures involving the public and private sectors. Among other provisions, the Law:

• sets forth additional platforms for the structuring, developing and implementation of infrastructure projects;
• regulates strategic investment contracts for infrastructure investment projects; and
• creates the Strategic Planning Council for Infrastructure Investment, which is responsible for defining investment priorities and evaluating the feasibility of projects.

Also, the Law recognises Special Purpose Vehicles (SPVs) as instruments to channel resources to eligible projects, combining public and private contributions, and incorporating private capital, financing resources, as well as debt and equity from development banks and institutional investors. Perhaps most importantly, the Law contemplates two principal forms of joint participation by the public and private sectors:

• long-term contracting, a structure with periodic payments linked to compliance with performance standards or results and where, upon expiration of the contract term, the assets are transferred to the State; and
• mixed investments, where both sectors share risks, costs, benefits and investments, based on each party’s participation interest.

The Law includes a catalogue of potential incentives and support mechanisms for eligible projects, including guarantee mechanisms or financial support from the Federal government and tax incentives. In May 2026, the Regulations to the Law were enacted, implementing the new mixed-investment infrastructure regime contemplated under the Law and establishing the conditions for obtaining support mechanisms, guarantees and incentives provided under the Law.

Electricity

In the energy sector, the Mexican state will maintain a majority stake in the generation of power but has openly supported the participation of the private sector in the electricity sector and in renewables and energy transition. The National Electricity Strategy promotes:

• energy transition towards renewable energy sources and energy self-sufficiency;
• efficiency and rationality in energy consumption; and
• clear rules for private investment.

The new rules allow for the ample participation of the private sector.

Substantial activity is anticipated in this industry to fulfil the growing demand for electricity and the lack of investment not only in generation, but in transmission and distribution grids. During the first half of 2026, the National Energy Commission has been actively issuing new Administrative Provisions of General Application (DACGs) in various subsectors of the electricity industry, including cogeneration and energy storage.

Capital and Financial Markets

Debt markets remain more active than the equity markets in Mexico. There are few incentives for issuers to go public in the Mexican market given the limited depth and liquidity. A number of Mexican companies have opted for listings abroad, for both equity and debt instruments. In January 2025, securities regulations were eased, aiming to increase access to capital markets.

Mexico has remained one of the most attractive hubs for banking and financial institutions, particularly for those focused on the full digitalisation of products and services. The Mexican Banking and Securities Commission has tightened the criteria to approve new banks and other entities in the financial market, including sociedades financieras populares (a vehicle that has often been used by institutions as a preparatory step prior to their conversion into fully licensed banks). Banking and financing needs in Mexico are extensive, and new institutions continue to find excellent opportunities to develop their business plans in Mexico.

Judicial Reform

Mexico has undergone a substantial judicial reform that contemplates, among other provisions:

• the designation of National Supreme Court justices and federal judges will be made by popular vote;
• an amendment to the National Supreme Court of Justice, including decreasing the number and tenure of justices; and
• an amendment to the system of administration of federal judicial power and the creation of a disciplinary court.

The reforms have been extensively criticised, and this impacts investment decisions. Concern about the rule of law in Mexico has prompted contractual parties to use arbitration and other dispute resolution methods. Election of judges by public vote is not well perceived. The judiciary has the potential to emerge as a strong, professional power if it endeavours to evolve and become a world-class judiciary.