Antonio Ortiz-Mena on Mexico's economy

ASG's Antonio Ortiz-Mena spoke with the Latin America Advisor to share Mexico's 2022 economic outlook:

“Mexico’s economic performance during the AMLO administration has been the worst one since the Great Depression, and the IMF estimates GDP growth of 2.8 percent this year. If Mexico’s economy grows at 6.3 percent in 2023 and 2024, average GDP growth will be zero, and GDP per capita will be lower than when AMLO took office. The reasons for this dismal performance are external and home-made. On the external front, the Covid-19 pandemic and related lower global growth spurred an economic downturn. However, the Mexican government’s refusal to engage in any significant counter-cyclical fiscal policies meant that the downturn was deeper and the recovery shallower than in comparable emerging markets. Mexico’s GDP growth in 2019–before the pandemic hit–was a negative 0.17 percent. This is partly explained by the unwarranted cancellation of the new Mexico City airport. Regulatory uncertainty and adversarial government-business relations ensued, most notably regarding energy policy. The most important policy changes that would foster greater certainty, a necessary condition to boost investment and thus growth, are to generate more constructive government-business relations conducive to accelerating Mexico’s energy transition and ensuring the provision of reliable, price-competitive clean energy, in addition to strengthening independent regulatory bodies. A second confidence-building measure would be the entry into force of a new Mexico-European Union trade agreement, whose negotiations concluded almost four years ago. Mexico’s trade policy is sound and has saved the country in the past, but is not enough in the face of these domestic policy challenges. Significant domestic economic policy shifts are unlikely.” 

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