Mexico’s Economic Plan Fails to Convince Businesses and Analysts

President López Obrador presented his economic plan for facing the COVID-19 sanitary emergency. However, the private sector and analysts believe that the economic plan falls short from the actual needs of the country. After S&P became the first rating agency to downgrade Mexico’s sovereign rate, many experts believe that Moody’s and Fitch could soon follow.   

In case you missed it, this is what made the headlines over the week!

• After President López Obrador presented its much-expected economic plan for the economic crisis generated by COVID-19, analysts and businesses claimed that what was presented was insufficient for the country given the extent of the crisis. President Obrador mentioned that the government will not incur into debt nor provide any type of fiscal incentive for companies.
• The economic plan for facing the pandemic has been received with criticism from the private sector. Different business leaders have shown their disagreement with the measures announced by the president. Carlos Salazar from CCE has said that the government has closed the door to the private sector. Meanwhile, Luis Niño de Rivera said the president’s perception of the crisis does not match the one of the private sector. Gustavo de Hoyos Walther from COPARMEX said that it had become unfeasible to “reach agreements” with the president. In light of this, CCE has called on its members to create a national unity plan to face the COVID-19 crisis and protect employments, salaries and family income.
• The private sector was not the only one that questioned the government’s economic plan. Analysts from Citibanamex said that the plan comes “too late and is too little” to face the COVID-19 emergency. Bank of America (BofA) says that the announcement did not include any new economic plan nor adjustment and would eventually lead to business closures. BofA also estimates that Moody’s or Fitch Ratings could soon follow S&P and reduce Mexico’s sovereign rate.
• After investment from Constellation Brands in a new plant in Mexicali was cancelled following a public consultation, the company has announced that in light of the current COVID-19 emergency and following the orders of the government, it is reducing its current operations in Mexico. The company has announced that it has sufficient local inventory for 70 days, so there should be no impact to retailers nor consumers.