Sheinbaum Second Report Economy: Mixed Verdict Behind the Record FDI Headline

MEXICO · POLITICS

The Sheinbaum second report economy story is one of contrasts: a record foreign-investment headline on top, stagnating new projects, fleeing Chinese capital and a falling stock market underneath.

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Claudia Sheinbaum delivered her second Informe de Gobierno on Tuesday, closing the constitutional reporting cycle with a ceremony at the National Palace and a written account sent to Congress. The Sheinbaum second report economy message was built around strength: record foreign direct investment, low unemployment, a firm peso and a homicide rate the government says has halved. The data published around the speech tell a more complicated story.

As The Rio Times reported in its preview of the address, the government led with a record first-half investment figure. What has become clearer since is the composition of that record — and why economists read it as a warning rather than a triumph.

New investment is the weak spot

Of the foreign direct investment registered in the first half of 2026, almost 89 percent was profit that established companies chose to reinvest — money from firms already in Mexico, not new bets on the country. Genuinely new investment contributed only US$2.73 billion, or 7.8 percent of the total, and fell 13.4 percent compared with the same period of 2025, according to the Economy Ministry’s registry data.

The second-quarter breakdown from Banco de México is starker. New investment between April and June amounted to just US$654 million — the lowest figure for a second quarter since 2014 and a drop of 51.4 percent year on year, according to Gabriela Siller, head of economic analysis at Banco Base. New projects made up barely 6 percent of quarterly flows, against a historical average above 37 percent for second quarters since 1999.

“New investment — new decisions, not ‘we earned money in Mexico and reinvested the profits’ — has fallen noticeably,” Fernando Iglesias Raggio, finance professor at IPADE Business School, told El Financiero. Economists link the hesitation directly to the unresolved review of the USMCA trade agreement with the United States and Canada: companies are keeping existing plants running but postponing new commitments until the trade rules are settled.

Chinese capital hits a four-year low

The clearest casualty of that uncertainty is Chinese money. Announced Chinese investment linked to nearshoring — companies relocating production closer to the US market — totalled just US$196 million between January and June, the lowest level in four years and a fall of 78.9 percent from the US$929 million announced in the first half of 2025, according to a study by consultancy RCPH Servicios reported by the newsweekly Proceso. In the first half of 2024, the figure had reached US$2.4 billion.

Luis Felipe Alcántara, public policy director at RCPH, attributed the collapse largely to US pressure on Mexico to limit its commercial ties with China in the context of the USMCA renegotiation. Separate tracking by the China-Mexico Studies Center at the National University (UNAM) found that Chinese FDI in Mexico fell 80 percent in 2025 to US$588 million — with automotive projects, once the driver of the boom, put on hold as Washington demands guardrails against what it calls triangulation of Chinese goods into the US market.

Markets sent their own verdict in August

Mexico’s benchmark IPC stock index ended August at 65,430 points, down about 2.3 percent from its July close of 66,937 — a losing month even though the index remains roughly 11 percent above its level of a year ago. The peso moved the other way: it gained about 1.9 percent against the dollar in August, its best month since April, ending near 17.04 per dollar, as The Rio Times detailed in its August markets review. (Exchange-rate basis for this article: 17.04 pesos per US dollar, Banco de México FIX, 31 August 2026.)

Business confidence, meanwhile, has been flat at best. The IMEF manufacturing indicator — the private sector’s most watched monthly survey — has kept its trend-cycle reading in contraction territory for 24 consecutive months through February, with the headline index hovering just below the 50-point threshold that separates growth from shrinkage. Consumer confidence has also drifted lower, falling 3.4 points year on year in May to 43.5 points, according to statistics institute INEGI and the central bank.

The Washington factor

Hanging over the investment climate is the USMCA review, formally opened on 1 July, and a fourth bilateral negotiating round between Mexico City and Washington expected within days. On Sunday, the government sent Congress a bill giving national-security powers to the foreign-investment commission — a step analysts describe as aligned with US demands but one that could add regulatory uncertainty of its own. Adriana García, economics coordinator at the think tank México ¿Cómo Vamos?, warned that ambiguous drafting could discourage the very investment Mexico needs, telling La Razón that investors may show “a certain aversion to risk” until implementation is clear.

The tariff squeeze is already visible in industrial heartlands such as Puebla, where Volkswagen’s Mexican operations have been caught between US tariffs and USMCA uncertainty. Sheinbaum’s economic team argues that Mexico’s fundamentals — inflation near 3 percent, unemployment below 3 percent, record investment inflows — will carry the country through the review.

What the report claims — and what it leaves out

Tuesday’s address leaned on the government’s strongest suits: a 51 percent drop in the daily average of intentional homicides over 22 months, expanded welfare programs and the record investment headline. Critics note that the record is built on reinvested earnings rather than new projects, that Chinese capital is retreating under US pressure, and that the stock market just posted a losing August.

For foreign investors and expats watching from abroad, the practical takeaway is narrower: Mexico’s macroeconomic stability is real, but the decisions that would create new factories, new jobs and new supply chains are largely on hold until the USMCA review resolves. The next concrete milestone is the 2027 budget package due in September — the first full fiscal test of Sheinbaum’s second year, as The Rio Times reported ahead of the address.

Frequently Asked Questions

What is the Segundo Informe?
Mexico’s constitution requires the president to report to Congress on the state of the administration each 1 September. Claudia Sheinbaum delivered her second such report on 1 September 2026, with a ceremony at the National Palace and the written document sent to the legislature.

Why do economists say new foreign investment is stagnating?
Nearly 89 percent of first-half FDI was reinvested profits from established firms. New investment totalled US$2.73 billion in the half and just US$654 million in the second quarter — the weakest April-June figure since 2014, down 51 percent year on year, per Banco de México data.

How much has Chinese investment in Mexico fallen?
Announced Chinese nearshoring investment fell to US$196 million in the first half of 2026, a four-year low and down 79 percent year on year, according to consultancy RCPH. UNAM’s China-Mexico monitor recorded an 80 percent drop in Chinese FDI for 2025.

How did Mexican markets perform in August?
The IPC stock index lost about 2.3 percent in August, closing at 65,430 points, though it remains up roughly 11 percent year on year. The peso gained about 1.9 percent against the dollar — its best month since April — to around 17.04 per dollar.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error