Long overlooked as underdeveloped, poverty-stricken, and limited, Mexico is turning things around. In fact, poverty in Mexico continues to fall, in response to strategic policies and plans to transform the Latin American country into an industrial powerhouse.
While much of the world looks to Asia to manufacture its goods, forward-looking companies have noticed the numerous reasons to outsource to Mexico. As a result, the extreme poverty often associated with the majority of Mexico is slipping. New numbers reveal that, in spite of lingering problems and deeply seated challenges, the country has a brighter future.
Mexico has been making impressive strides in its battle against poverty. Over the last several years, the country has witnessed a significant drop in its poverty rate, falling from approximately 50% of the population in 2018 to 43.5%, according to a 2023 study by Coneval, the nation’s poverty analysis agency. This translates to 5.7 million fewer people living below the income threshold needed for basic needs like food and clothing.
And why is poverty in Mexico declining? Mexico’s success in reducing poverty is largely credited to two key factors:
The remittances, money sent home by Mexicans working abroad, have almost doubled since 2018, growing from $33.5 billion to an estimated $60 billion in 2023. Much of this money goes directly to the country’s poorest families, helping them cover essentials and stay afloat.
Mexico’s minimum wage has also risen substantially, from about $4.50 a day in 2018 to roughly $12 in 2023. While still a relatively low cost of labor, this boost, along with the appreciation of the Mexican peso, has enhanced the purchasing power of millions. This further contributes to the nation’s economic growth. And as a result, more Mexicans are now able to access better education and healthcare, lifting their families out of poverty, and driving down the overall rate of poverty in Mexico.
Remittances, meanwhile, continue to play a pivotal role in boosting financial security for many lower-income households. For the poorest families, this influx of money is often a lifeline, helping them manage everyday expenses and prevent further financial hardship.
Despite these positive trends, challenges persist. Coneval’s report highlighted that extreme poverty — defined as those unable to afford basic food needs — slightly increased from 7% in 2018 to 7.1%.
Additionally, healthcare-related financial burdens have increased. The percentage of people reporting money problems related to medical costs grew, likely due to both the ongoing restructuring of Mexico’s healthcare system and the lingering effects of the COVID-19 crisis.
During the course of his tenure, López Obrador’s administration had introduced various social programs aimed at alleviating poverty, including pensions for people over 65 and apprenticeships for young people. However, these initiatives are not means-tested, meaning they are available to all who qualify, regardless of income. As a result, it’s unclear how much they’ve benefited Mexico’s poorest populations specifically.
Still, Mexico’s broader economic and pro-manufacturing policies have helped foster growth and improve conditions for millions of citizens. The expansion of social mobility, alongside the increased purchasing power of workers, have driven consumer demand and strengthened the country’s economy.
Reducing poverty in Mexico is part of a larger, ongoing economic strategy. While extreme poverty remains a pressing issue, the overall decline in Mexico’s poverty rate suggests progress. The country’s push for sustainable development, coupled with increased foreign investment, offers hope for continued growth. The Mexican labor force — seen as key to future success — remains competitive, especially in the manufacturing sector.
Though the journey is far from over, Mexico’s fight against poverty is gaining ground. As remittances continue to flow in, wages rise, and economic conditions improve, there’s reason to believe the country can continue reducing poverty and building a more prosperous future for all its citizens and those businesses creating opportunities there.