The year ends with mixed signals; On the one hand, there are aspects that presuppose that the Mexican economy could begin its recovery after three difficult years, on the other hand, there are elements that presuppose signs of stagnation that are coupled with high levels of inflation. At the beginning of the current government, the vital component of growth; investment was in decline. Although the economy grew 2.5% in the last year of the past administration, there were no signs that would presume an increase in investment. Once the current administration started, the economy fell from 2.5 to 0%; the second year, the fall was 8.9%, for this year we could be growing around 5.4 percent. These circumstances make it imperative to start growing now to reverse the adverse consequences that naturally entail 3 years of financial difficulties. When there are prolonged episodes of low levels of both public and private investment, structural deteriorations can emerge in hard-to-reverse economies. In our case, this component represented 22% in 2018 at least 3 points below what is required to achieve growth levels, for example, 4% per year, however, at the moment we reach 17.8 percent. So far, the main elements that have kept the Mexican economy going are fundamentally external. Indeed, exports of our products mainly to the United States and remittances notoriously represent a good part of what has been sustaining our economy.
The effect of the Covid, so far, has prevented tourism, to cite one example, from contributing its part to development. So far little has been recognized, but government spending, especially that directed at social assistance programs, is an additional element that supports consumption. Government transfers to the marginalized, exports and remittances have prevented the adverse effects of the long confinement from being greater. Additionally, it is pertinent to affirm that the government of President López Obrador has made an important contribution so that, although circumstances have limited growth, there is stability, which provides a strong base to undertake a forward recovery. Fiscal discipline has been decisive in maintaining the sovereign rating, cushioning market volatility and avoiding irreparable damage from Covid. It is time, then, to take advantage of this stability and government discipline in public finances to face the challenges that 2022 will present. Our country is not at zero, nor is it in crisis, but it needs to grow with its own internal elements, using exogenous ones as what they are, a complement. The challenge is to maintain macroeconomic stability with the same importance that we must take all possible measures to increase investment, this will be the vaccine that will protect the country from the instability in the markets that will be present next year.
Doctor in Economic Development and Law and Philosophy
AUTHENTICITY
Professor at the Universidad Panamericana, Ibero and TEC. He has worked at the Bank of Mexico, the Ministry of Finance, the Presidency of the Republic and in Washington, DC. Author of books on economic history, financial regulation, monetary policy, economics, and ethics.