Economics: The 2027 Economic Package shows the same public finance trends and problems as 2018-2026
The 2027 Economic Package presented by the SHCP on September 8 implies that public finances will likely continue along the same trajectory they have followed since 2018. In that regard, it is worth recalling that tax revenue grew steadily thanks to more aggressive income tax enforcement and lower refunds, offsetting the decline in oil revenue caused by Pemex's weak performance, while spending expanded even faster, driven by social transfers, support for Pemex, and rising financing costs, at the expense of health, education, public investment, and agricultural support. This imbalance produced a sustained deterioration in the primary balance, a broad deficit that peaked in 2024, and expanding debt, to the point where interest payments now rival subsidy spending and exceed physical investment: a vicious circle in which the country borrows to pay interest on prior debt.
Cumulative figures for 2026 confirm this dynamic: through July, revenue grew below target while spending (payroll, transfers, pensions) exceeded it, meaning the second half of the year will require a considerable fiscal effort to meet approved targets. We estimate the broad deficit will close the year at 4.9% of GDP, above the 4.1% assumed by the Ministry of Finance, which from the outset shapes the design of the 2027 budget.
The macroeconomic framework in the CGPE is, unlike in previous years, conservative and reasonably aligned with private-sector projections. However, it features a GDP deflator (4%) notably higher than estimated inflation (3.2%) — a device that inflates nominal GDP and thereby artificially understates deficit and debt indicators as a share of output.
The 2027 fiscal package seeks to continue "fiscal consolidation" by bringing the PSBR down from 4.1% to 3.9% of GDP, but it rests on fragile assumptions: additional revenue of nearly 600 billion pesos, mainly through corporate income tax (via stricter deduction limits and a de facto increase in the effective rate, despite the messaging of "no new taxes") and a gasoline excise tax (IEPS) that would require a decline in the international oil price that seems unlikely given the current geopolitical context. On the spending side, it underestimates pensions and assumes a 60% reduction in financial support for Pemex with no evidence of a genuine improvement in the company's finances, along with a containment of operating expenditure (-7%) that will be difficult to sustain in an election year. As a result, we project a deficit of 4.6% of GDP in 2027, rising to 5.4% by 2030, with net debt reaching 62.1% of GDP versus the 56.4% estimated by the SHCP.
Turning to last week's indicators, industrial production in July 2026 posted a monthly increase of 0.5% and an annual increase of 2.4%, marking its second consecutive month of positive growth. So far this year (January-July), industrial activity has risen 0.4%, the first positive cumulative growth rate recorded in 2026.
Notably, mining, oil, and construction have led the industrial recovery this year. Machinery and equipment, along with computing and electronics, are beginning to drive manufacturing activity, which, however, remains in negative territory (-0.7% over the first seven months of the year). Separately, consumer price inflation in August came in at 3.26%, up 14 basis points (bps) from July's 3.12%. This was driven by the non-core component, which rose to 1.13%, 89 bps above July's 0.29%. The core component eased slightly to 3.88%, 7 bps below July's 3.95%. The non-core component could foreseeably continue rising in the coming months, pushing overall consumer inflation higher.
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