Annual GDP growth of 2% will not save the poor, 5% minimum is needed

Brussels, Belgium.- Marcelo Ebrard, one of many contenders for a presidential candidacy, preferably MORENA’s, gave a speech two weeks ago to attendees at the North Capital Forum 2022.

He caught my attention when he assured that the relationship that our country has with the US and Canada will contribute to accelerating the economic development of Mexico so that the GDP grows more than 2% each year. He said more than 2%, but not how much more, which suggests that he does not believe that 3% each year will be possible.

And the “corcholata” that is best seen by those who do not want the next president to be a lifelong leftist, like Claudia Sheinbaum, or another Tabasco, like Adán Augusto López Hernández, is right. According to the International Monetary Fund (IMF), the Mexican economy will grow 2.1% annually in 2022, 2025, 2026 and 2027, while in 2023 and 2024 just 1.2% and 1.8%, respectively.

Those growth rates are not high enough to improve the reality of the millions who are poor today and who are likely to die poor.

For years, economists who do not say what the government wants to hear have claimed that to remedy the chronic problem of poverty, the economy must grow between 5% and 7% each year, without interruption, which seems almost impossible.

The last time that the GDP grew more than 5% was in 2010, when it registered an increase of 5.12%, the result of the rebound that the economy registered after collapsing 5.29% in 2009 as a consequence of the global economic crisis that began a year earlier in USA.

In the 40 years since 1982, Mexico’s GDP has only grown by more than 5% five times, in 1990 (5.21%), 1996 (6.77%), 1997 (6.85%), 1998 (5.16%) and 2010 ( 5.12). The worst thing is that in that same period it registered nine annual decreases: 1982 (-0.01%), 1983 (-4,365), 1986 (-3.71%), 1995 (-6.29%), 2001 (-0.40%), 2002 (- 0.04%), 2009 (-5.29%), 2019 (-0.20%) and 2020 (-8.06%).

Until now I have not heard any presidential hopeful explain how they intend to make the GDP grow 5% or more each year. And I doubt that I would believe him if he said so because there are already several presidents in a row who have broken his promises.

Zedillo promised an annual increase of between 6% and 7%, Vicente Fox of 7%, Felipe Calderón of just over 5%, Enrique Peña Nieto of 6% and Andrés Manuel López Obrador of 4 percent.

Last March, the former Secretary of Finance and Foreign Affairs and former Secretary General of the Organization for Economic Cooperation and Development (OECD), José Ángel Gurría, said that “The economic growth that Mexico needs is not 2%, it is from when less than 5% sustained in one or two entire generations to recover lost time and social spaces, to reduce enormous inequalities (…) Foreign investment policies must be stable, predictable, that attract capital so that we achieve the –speed cruising – in the economy”.

If any candidate for the presidency – popper or not – presents me with a realistic plan to achieve that sustained 5%, he will have my vote. I doubt any of them (or they) have it.

Important note: In my text yesterday I mistakenly wrote down the name Ana Lilia Herrera when it should have been Ana Lilia Cepeda.

Twitter: @ruizhealy

Facebook: Eduardo J Ruiz-Healy

Instagram: ruizhealy

ruizhealytimes.com