Image credits: Gobierno de México
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News Article

Mexican Economy Forecast Increases/Austerity Law

By Paloma Duran | Thu, 07/28/2022 - 14:23

Mexican economy forecast increases. President Andrés Manuel López Obrador celebrated that the International Monetary Fund (IMF) has increased Mexico's growth forecast. López Obrador stressed that with this push, Mexico becomes one of the few countries set grow despite the crisis. “The Mexican economy is doing very well and the Mexican peso is performing strongly. We have do have inflation but it is controlled, certainly below that of the US and Europe. . In addition,  foreign investment continues to increase like never before.”

IMF published its revised World Economic Outlook for July, highlighting that Mexico’s GDP is expected to have a 0.4 percent increase, more than expected in 2022. The World Economic Outlook Update reported that Mexico’s economy fell 8.1 percent in 2020 after the global shock from the COVID-19 pandemic. However, it noted a vital recovery of 4.8 percent in 2021 in a major rebound for the country. For 2022, the outlook predicts a 2.4 percent increase, as the country slowly moves towards pre-pandemic numbers.

In regards to investments, experts say that the current political environment is driving away significant investors. Last week, the US and Canada requested trade dispute talks with Mexico, arguing that due to its energy policies, the country is not fulfilling its obligations under the USMCA. Both countries said that Mexico is favoring state-owned companies CFE and PEMEX over private and foreign ones, and as a consequence, this is hurting their investments and restricting market access. Experts argue that if the USMCA complaint remains unresolved, Mexico would face retaliatory tariffs.

Government spending can be reduced: AMLO. López Obrador said that the margins to reduce federal government spending are being evaluated, including limiting travel and operating expenses so that there are more resources allocated to the population. “Austerity is not an administrative issue; it is about principles. There are always margins to cut budget. We have to take care of all the expenses in order to spend less.”

Yesterday, López Obrador announced that he would re-enact the Reform to the Federal Republican Austerity Law to reduce the budget and eliminate benefits for public officials. In 2019, the Law was enacted for the first time. However, it did not achieve the expected results. The Mexican civil association Against Corruption and Impunity (MCCI) denounced that the federal government has budget problems because it spends a lot and has irregularities in contracts. MCCI reported that so far in 2022, the government has accelerated federal spending to more than MX$722 billion (US$35.44 billion) through 77,000 contracts, which lacked transparency and did not comply with the law. In addition, the organization has accused that around 78 out of 100 contracts were assigned directly.

AIFA suburban train extension. President López Obrador reported that the government already has a project for the construction of the suburban train that would connect the Felipe Ángeles International Airport (AIFA) with Mexico City. “This option is the most efficient, so no time or money is wasted.”

López Obrador had a meeting yesterday concerning the construction of the new AIFA train tracks. The route of the new train will take a 45-minute travel-time from Mexico City to the AIFA. The new route will be 23km long and will have five stations and the Cuautitlán terminal. Likewise, the government also plans to widen the lanes of the Mexico-Pachuca highway so that there is not much traffic on this road traveling to the AIFA.

The data used in this article was sourced from:  
Gobierno de México, Milenio
Photo by:   Gobierno de México
Paloma Duran Paloma Duran Journalist and Industry Analyst