The fall of the Mexican economy accelerated with the pandemic but began its decline earlier , when President Andrés Manuel López Obrador came to power . In the last two years, poverty increased, so that the remittances sent by nationals to their families represent the only income of millions of people.
Investment, both from foreigners and national companies, fell and one out of every five businesses closed permanently. Mexicans will go to the polls this Sunday in a legislative election that will endorse or reject the performance of the federal Administration, but, despite these conditions, the economy is not a central issue in the vote.
In other Latin American countries, such as Ecuador and Peru, this year’s elections put the economic model on trial . In Colombia, inequality and poverty sparked massive protests that continue to this day. But Mexico navigates different political times, against the regional trend.
This is agreed by experts, it is due in part to the fact that President López Obrador has taken the reins of a narrative that assures citizens that his is already a different model and that the economic crisis is global, and has nothing to do with his policies. .
“The fact that the economic crisis due to the pandemic has been global gave many leaders, not only the president of Mexico, the possibility of putting domestic problems under the table of the global crisis,” says Francisco Varela, director of institutions and governance at the Mexican Institute for Competitiveness (IMCO), “like when you throw the dust under the rug so it can’t be seen. The dust was already there, it’s just that the mat allows you to cover it ”.
Between the end of 2018 – when López Obrador assumed power – and today, the number of people in working poverty grew by 13 million . The economic recovery driven by trade with the United States has been uneven, benefiting the north of the country and excluding the south. Gross fixed investment has fallen 10% in the same period, according to data from the National Institute of Statistics and Geography (Inegi).
And, according to data from the central bank, foreign direct investment also fell during this six-year period compared to the same period of the previous six-year period. Despite the fact that economic activity, as measured by Inegi, is already approaching its pre-pandemic levels, it is still 2.8% below where it was before the start of the López Obrador Administration.
In addition, according to an Inegi survey, at least one million small and medium businesses in the country closed permanently due to the covid-19 pandemic. This sector contributes about 90% of the jobs in the country.
Many investments to the country depend on the results of the elections, in which the Chamber of Deputies as well as some local governments will be renewed, as well as the approval of large government infrastructure projects that could boost the economy.
“The economy plays a role in this election, but in a dissociated way,” says Vidal Romero, professor of Political Science at the Autonomous Technological Institute of Mexico (ITAM), “at the national level it does not seem that the bad economic situation of many is affecting it. Morena or the image of López Obrador and the fight is over who can compensate for that locally. Therefore, what we see are many offers of change on the part of candidates for governor or mayor ”.
This is generating an election in which the government’s performance is not being evaluated retrospectively, but prospectively, with voters asking who is going to give them that economic opportunity or that income that they need from the economic crisis? “In the context of Mexico, that has never been good news, because we end up with candidates offering client transfers or non-transparent programs,” says the academic.
López Obrador came to power campaigning against neoliberalism, an economic philosophy that favors privatization and liberalization of markets and which influenced past governments.
When he took the presidency, AMLO, as López Obrador is known, established daily press conferences in which he assured the media that this era had come to an end, since it allowed large companies, both national and transnational, to abuse from the treasury through abusive contracts. He has accused officials of previous administrations of corruption and conflicts of interest with the private sector.
However, his government has resorted to direct awards to sign contracts with private companies, despite the fact that the law favors public tenders that make the terms transparent to eliminate possible conflicts of interest. It has also placed most of its infrastructure works in the hands of the Army, excluding private construction companies.
To address poverty, the Government advanced aid to unemployed young people, peasants and the elderly through social programs that precede the pandemic. He was harshly criticized for failing to support those who lost their jobs during the pandemic and offering small loans, rather than direct transfers, to businesses that had to close to meet mandatory lockdowns.
“Although the president’s programs are direct transfers to citizens, they forgot to attend to business, to companies that did not have the financial strength to survive the pandemic,” says Varela, from IMCO. “But it is also true that the Government has established with its social programs a scheme of selective incentives where millions of families are receiving money that they had never received before,” he adds.
“To explain why, if the economic situation is so critical, a very high percentage of the population is not going to punish the Government for poor economic performance, it should be said that a system of selective incentives has been implemented through social programs and that The system is going to be very effective in mobilizing people to go, vote and support the Government ”.
The recovery of the post-pandemic economy has already begun, according to data from Inegi. Banco de México ensures that the economy could grow by up to 7% this year, driven by fiscal support programs in the US, the country’s main trading partner. However, this engine drives only those states that have manufacturing plants linked to foreign trade.
The Laboratory of Analysis in Commerce, Economy and Business of the Autonomous University of Mexico (UNAM) registered that six states of the northern region of the country contribute 25% of the total GDP of the country, while another 25% is contributed only by the City of Mexico and its neighboring State of Mexico.
“Sustainable development with territorial productivity and equitable and homologated growth must be promoted,” says a report from the research center. “To promote growth above 2% in 2023, it will be necessary to carry out a fiscal reform in 2022 that allows territorial development with sustainable, inclusive and equitable growth, before the country’s productivity must be strengthened to boost business competitiveness,” they added. the professors of the UNAM and authors of the report.
“In the opposite direction, the economy will have a K-shaped growth, prevailing the growth of the export sector driven by the free trade agreement with the US and Canada with a fall in labor income with inequality and poverty.”
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