Daily: Mexico Economic 17.12.2025

TODAY'S BOTTOM LINE: How Today's Updates Affect You

The National Banking and Securities Commission (CNBV) revoked Vector Casa de Bolsa's operating license after the 50-year-old brokerage requested voluntary dissolution following US Treasury sanctions in June for alleged money laundering. ECLAC cut Mexico's 2026 growth forecast to 0.4% from 0.6%, placing it among Latin America's weakest performers alongside Bolivia as the regional average reaches 2.4%.

The Federal Electricity Commission (CFE) proposed rules requiring independent power producers to sell exclusively to the state for five years with potential asset transfers at no cost, alarming US and Canadian investors. Mexico's monetary base expanded 7.8% annually to MX$3.46 trillion while international reserves held at US$250.5 billion, providing buffers against external shocks.

Vector's closure marks the end of US sanction-driven financial sector restructuring; ECLAC's downgrade underscores governance and investment challenges; CFE's proposal risks USMCA disputes; and reserve strength offers resilience but monetary expansion warrants inflation vigilance.

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FEATURED STORY

Mexico’s Financial Regulator Revoked Vector Casa de Bolsa License After US Sanctions

Details | The National Banking and Securities Commission (CNBV), he country’s financial regulator overseeing banks, brokerages, and investment funds, revoked the operating license of Vector Casa de Bolsa, a brokerage founded by businessman Alfonso Romo, who previously served as chief of staff under President Andrés Manuel López Obrador. The revocation was voluntary after Vector submitted a formal request on December 1. The move comes six months after the US Department of the Treasury sanctioned Vector for alleged money laundering activities linked to organized crime.

Prior to revocation, Vector transferred its client portfolio to Finamex Casa de Bolsa in October and sold international accounts from its subsidiary VectorGlobal to Insigneo Financial Group. The CNBV appointed Gerardo Maldonado García as liquidator and confirmed the request met all legal, financial, and operational requirements. Vector became the third of three institutions sanctioned by the US in June to exit Mexico's financial system, following CIBanco's October liquidation and Intercam's sale of operations to Kapital Bank.

Analysis | The case highlights how US financial sanctions increasingly determine Mexican financial sector participation regardless of domestic regulators' findings—Finance Minister Édgar Amador stated in June there was "no evidence" against the three institutions, yet all three exited within six months. Vector's client transfer to Finamex and VectorGlobal sale to Insigneo preserved continuity, but reputational damage creates heightened scrutiny for smaller brokerages handling cross-border transactions. For financial institutions, the precedent means that US Treasury designations carry more weight than CNBV clean bills of health, requiring enhanced anti-money laundering protocols and careful client screening for any connection to sanctioned entities or suspicious activity patterns flagged by the US.

The consolidation leaves Mexico's brokerage sector with fewer, more tightly regulated players—Finamex gained substantial market share by absorbing Vector's clients, while smaller brokerages face pressure to demonstrate compliance capabilities or risk being shut out of international markets where correspondent banking relationships depend on US regulatory acceptance.

MONETARY & FISCAL POLICY

ECLAC Cut Mexico's 2026 Growth Forecast to 0.4% as LATAM Averages 2.4%

Details | The Economic Commission for Latin America and the Caribbean (ECLAC) downgraded Mexico's expected GDP growth for 2026 to 0.4%, down from its October estimate of 0.6%. This places Mexico among the weakest performers in the region alongside Bolivia, while the LATAM average reaches 2.4%. ECLAC cited weakened domestic demand, declining remittances, lower private consumption, and reduced investment compounded by external uncertainty over potential US tariffs. The report noted that while inflation is easing across Latin America, labor markets remain fragile with persistent informality and gender gaps.

Analysis | The 0.4% projection reinforces Mexico's position as an outlier—it is LATAM's second-largest economy yet growing at one-sixth the regional pace. The forecast undercuts the Sheinbaum administration's narrative that infrastructure spending and industrial policy will drive recovery, suggesting these measures are insufficient against governance headwinds and trade policy uncertainty. ECLAC's assessment validates the need for conservative growth assumptions—companies expecting 2026 domestic demand recovery should recalibrate, as 0.4% growth barely keeps pace with population expansion and won't generate significant new consumer purchasing power or business investment.

ENERGY AND INFRASTRUCTURE

Mexico’s state electricity company CFE proposed new rules forcing private generators to sell only to the state, raising alarm among investors

Details | The Federal Electricity Commission (CFE) published a draft regulation requiring independent power producers to sell electricity exclusively to CFE for five years. Under current rules, generators can sell to CFE through long-term contracts and later migrate to the wholesale market while retaining plant ownership. The new proposal restricts sales and gives CFE the option to acquire generation assets at no cost, a change private firms warn could constitute indirect expropriation. Companies affected include AES Energy, Naturgy, Mitsubishi Power, Acciona, and Saavi Energía, many with US and Canadian ties. The draft follows a 2024 constitutional reform expanding state electricity sector control and comes as CFE secured a US$300 million loan from the Development Bank of Latin America and the Caribbean (CAF) for transmission and distribution projects.

Analysis | The proposal signals deeper state dominance unsettling investors who see it undermining property rights and market access guaranteed under USMCA energy chapters. If enacted, the rules could trigger formal trade disputes given US and Canadian firms invested under previous frameworks promising long-term contract stability and eventual wholesale market participation. For power companies, the immediate decision is whether to submit comment letters opposing the draft during the consultation period or begin negotiating exit strategies—the "no cost" asset transfer language effectively allows CFE to confiscate private generation infrastructure, making future investment untenable. Energy-intensive manufacturers should assess exposure to potential price increases if CFE consolidation reduces competition and eliminates market efficiency gains from private participation.

CORPORATE & MARKETS

Mexico's Monetary Base Grows 7.8% to MX$3.46 Trillion—International Reserves Hold at US$250.5B as Year-End Liquidity Demand Rises

Details | Mexico's Central Bank (Banxico) reported that the monetary base grew by MX$42.48 billion in the week ending December 11, bringing the total to MX$3.463 trillion, a year-over-year increase of 7.8%. The monetary base includes cash in circulation and commercial bank deposits at Banxico. International reserves stood at US$250.5 billion after a weekly adjustment of US$73 million mainly due to changes in foreign asset valuation. The reserves, composed of foreign currencies and monetary gold, serve as a financial buffer but are not available for government spending.

Analysis | The 7.8% annual monetary base expansion reflects seasonal December liquidity needs as households and businesses increase cash holdings for holiday spending, but sustained growth also signals broader monetary accommodation. While reserves remain near historic highs providing Banxico with cushioning against trade tensions or capital outflows, the monetary base increase warrants attention given inflation persistence at 3.80% (November) with core at 4.43%. The combination of expanding money supply and above-target inflation suggests Banxico faces constraints on how aggressively it can continue rate cuts—markets pricing 90% probability of a December 18 cut to 7% may be underestimating the risk of a pause if board members prioritize inflation credibility over growth support.

TRADE & COMMERCE

National Agricultural Council Proposes Contract Farming System as Grain Sector Faces Profitability Crisis

Details | The National Agricultural Council (CNA), Mexico's main agribusiness association, urged authorities to maintain dialogue with producers amid a grain sector profitability crisis. CNA President Jorge Esteve presented a proposal built on three pillars: expanding contract farming with financing and risk-coverage tools, creating differentiated policies for small, medium, and large producers, and offering targeted support only when market prices fail to cover production costs. The CNA rejected isolationist measures such as government-set official prices and stressed that strengthening the USMCA is vital for food security, rural employment, and price stability.

Analysis | The CNA's emphasis on contract farming over fixed prices reveals the sector's preference for market-based solutions even while acknowledging structural disadvantages against US competitors benefiting from stronger subsidy mechanisms. The proposal creates opportunities to participate in contract farming arrangements that provide financing and risk management—companies with balance sheet capacity to extend credit or lock in forward purchases can secure supply while helping producers manage volatility. The call to strengthen the USMCA ahead of the July 2026 review positions agriculture as supportive of the trade agreement despite farmer protests over the Water Law and guaranteed corn prices, giving negotiators cover to resist US demands for restrictions on Mexican agricultural exports.

QUICK HITS: 4 More Updates Worth Tracking

1/ Peso Strengthens to 17.93 Per Dollar—Strongest Level in 2025 – The Mexican currency appreciated 0.28% daily and 13.81% annually on December 16, reaching its lowest exchange rate of the year.

2/ Samsung and Eight Maquiladoras Dispute MX$6.7B VAT Assessment With SAT – Companies argue the Tax Administration Service (SAT) retroactively changed interpretation of the IMMEX temporary import program, with the Supreme Court to hear the case that could result in MX$46 billion in refunds.

3/ Sheinbaum Guarantees 2026 Medicine Supply After Paying MX$15B in Arrears – The government paid down supplier debts with Undersecretary Eduardo Clark confirming 4,500 million pieces purchased and supply secured, though certain contracts won't be renewed after irregularities were found.

4/ José Antonio Kast's Chile Election Opens Opportunities for Mexican Telecom Investment – América Móvil's joint venture with VTR and planned Telefónica acquisition benefit from Kast's pro-business environment, with analysts citing favorable investment climate under the new administration.