The Economy

Mexicans are almost as concerned about the state of the economy as they are about security. In fact, until the beginning of 2011, it ranked more worrisome than the security situation. This will be an important policy issue to watch in the debates leading up to the 2012 election. In addition to candidate proposals for job creation, for example, analysts will also watch for potential marco-economic policy suggestions, as well as the approach to structural problems such as the many Mexican monopolies and existing relationships such as NAFTA.

News and Analysis

This election reflects the Mexican electorate’s judgement on 12 years of economic management by the current ruling party, the National Action Party (PAN).

“I don’t know the president of Venezuela, Hugo Chavez. I have never even talked with him on the phone,” he told a news conference in Mexico City. “The model we are going to put in place in Mexico is part of our reality, a Mexican model.”

“We are not going to copy other models.”

  • 6/4/2012: The presidential candidates positions on social security reform, and why a group of experts found them to be lacking

While from a foreign investment perspective, Wood notes that “the Mexican economy appears inviting, with sustained economic growth, low inflation, a low reported unemployment rate, and strong government finances,” voters are less impressed. The chronic underemployment, depressed wages and ten percent extreme poverty rate explain in part why Mexicans “consistently believe that their economic situation is worse than it was a year ago, and that the situation will not improve in the coming 12 months.” These numbers have deteriorated since Calderón entered office in 2006.

  • 4/27/2012: Extensive interview by The Wall Street Journal with the campaign chief for Enrique Peña Nieto (PRI), Luis Videgaray
  • 4/16/2012: The PRD’s Andrés Manuel López Obrador reassures leading private-sector finance chiefs on April 12. From “The Week in Review:” 

The Los Angeles Times reports that “[López Obrador] was greeted with smirks and chuckles at some points, but drew applause when he said he’d basically ‘maintain macroeconomic policies’ currently in place in Mexico.”

He told the Institute of Mexican Finance Executives (IMEF) that he had no plans to expropriate, and would respect concessions and contacts to foreign companies. He said he would aggressively seek to reduce poverty and combat corruption and waste through austerity measures, resulting in annual growth of six percent. He emphasized here, as he has elsewhere, that his overall model is former leftist President Luiz Inacio Lula da Silva, who helped Brazil on its path to an economic powerhouse.

  • 3/28/2012: Reuters on the economic positions of the presidential candidates:

Pena Nieto and Vazquez Mota have pledged to maintain the stable macroeconomic policies of recent years. Under Calderon, public finances were kept under control, helping the central bank avoid the inflationary shocks and sharp peso devaluations that periodically dogged the country in the 1980s and 1990s.

Lopez Obrador says he will respect the central bank’s independence and pursue the same policy. He told Reuters he hoped the bank would not just focus on inflation but also explore options to boost growth.

  • 3/19/2012: Enrique Peña Nieto’s presidential campaign chief Luis Videgaray told reporters that a victorious PRI government would seek to tap foreign capital markets more and push ahead quickly with energy and tax reforms. From “The Week in Review:”

In an interview with Reuters, Videgaray detailed a range of economic reforms that suggested that “the PRI would be far more market-friendly in power than it has been since 2000, when it became the opposition party.” The PRI would push for flexibility in labor markets, greater domestic competition, and fiscal reform to boost tax collection and lower the country’s dependence on oil revenue. It would also create a domestic development bank to promote commercial lending.

Many of the reforms were proposed by PAN governments under Felipe Calderón and Vicente Fox, yet stalled in the PRI-dominated legislature.

  • 10/11/2011: El Universal compares Enrique Peña Nieto’s and Manlio Fablio Beltrones’ economic plans side by side

Lopez Obrador charged that the rise of such cartels results from U.S.-backed free-market policies that have impoverished Mexicans and thwarted internal development in favor of an industrialized north near the U.S. border.

“In few words, the violence in Mexico (stems) fundamentally from the lack of development,” he said, suggesting that the collapse of peasant farming and the lack of jobs leads young Mexicans into the drug trade or to emigrate in search of work north of the border.

Almost all U.S. aid to Mexico goes to supporting military modernization to combat cartels, he said. The United States should “amplify and reorient” its aid to Mexico to focus on developing the poorer southern states, from where many undocumented workers hail.

  • 10/10/2011: Enrique Peña Nieto (PRI) releases a 10-point economic plan:
Peña Nieto said Mexico needed to redefine its approach to battling monopolies and seek to make the private sector more competitive. “Only in countries that promote competition is there innovation, allowing the population to enjoy more and better quality goods and services, at better prices.”
  • 6/27/2011: CNN Expansión details the economic legacy of the governorship of Enrique Peña Nieto (PRI) in the State of Mexico:
Esta entidad, la más poblada del país al concentrar 13.5% de los habitantes totales, es la segunda que más aporta al Producto Interno Bruto (PIB) nacional, con 9.7%, de acuerdo con el INEGI,pero también es una de las menos competitivas, según el Instituto Mexicano para la Competitividad (IMCO).
  • 6/10/2011: Finance Minister Ernesto Cordero (PAN) calls for a debate with Mexico City Mayor Marcelo Ebrard (PRD) and outgoing Governor of the State of Mexico Enrique Peña Nieto (PRI) about Mexico’s economy:

En un mensaje a los medios, el funcionario dijo celebrar la disposición de ambos políticos para discutir sobre las gestiones públicas de las últimas décadas. Cordero admitió que la recuperación económica es insuficiente, por lo que los funcionarios del actual Gobierno trabajan generar una mayor confianza de los empresarios y generar empleos.

  • 6/8/2011: Marcelo Ebrard (PRD) says poverty has increased since the PAN entered the presidency in 2000:
El número de pobreza, incluso pobreza alimentaria, ha crecido en vez de decrecer; evidentemente hay que pensar en un rumbo distinto en la política económica, ahí están las evidencias.
  • 6/4/2011: Santiago Creel (PAN) talks to a group of students about Mexico’s economic challenges:
El País necesita crecer, impulsar mucho la inversión, generar más empleos y que se redistribuya el ingreso del país, porque hay pocos que tienen casi todo y muchos que tienen muy poco, entonces hay que cerrar la brecha entre los que tienen mucho y los que tienen poco aplicando una economía humanista.
  • 5/2011: Duncan Wood, ITAM professor and senior advisor at CSIS and the Mexico Institute, details each of the party’s likely guiding economic philosophy, ending with:

The questions surrounding economic growth and stability after July 2012 are of vital importance when we consider the interdependence of the U.S. and Mexican economies, when we consider how U.S. competitiveness increasingly depends on the integrated production networks of the NAFTA region in general, and when we consider the impact of either low or high economic growth on the migration of Mexicans toward the north.

López Obrador detalló que también se cobrarían impuestos a las 400 grandes corporaciones, entre ellas las instituciones bancarias, que tienen ingresos por 6 billones de pesos anuales, para fortalecer la hacienda pública y contar con recursos suficientes para financiar el desarrollo nacional y los programas dirigidos a los sectores más pobres del país.

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