The Obsession with Avoiding Recession Label
Mexico’s government, through its spokespersons, is determined to prevent any discussion of a potential recession. This obsession stems from the regime’s need for infallibility, which has become an obsession.
López Obrador’s Perspective
For López Obrador, nothing seemed to go wrong, and any shortcomings were always someone else’s responsibility, often his political adversaries conspiring domestically and internationally to sabotage his Fourth Transformation.
His six-year term ended with the conviction of many followers that everything was well, his projects were spot-on: Two Bocas, Felipe Ángeles airport, Tren Maya, Danish-like healthcare, no bullets but hugs, and a remarkable economic performance.
Contrasting Data
However, the data tells a different story. Government-subsidized white elephants exist, and the healthcare system was better under the Seguro Popular. Goodbye hugs, and the economy had an average growth of only 0.8% annually throughout his term.
Interpreting Recent Economic Indicators
With the recent release of the Gross Domestic Product (GDP) behavior estimate for the first quarter of this year, there will be attempts to explain that the resulting data, whether above, near, or below zero, does not constitute a recession when combined with the negative -0.6% result from the fourth quarter of 2024.
Technically, two consecutive quarters with negative data may not qualify the current Mexican economic situation as a recession. However, this does not mean that the factors contributing to an economic storm impacting Mexico will improve in upcoming quarters.
- Learning Curve: Any new government starts with a period of non-growth as they learn the ropes.
- Legacy Projects: Maintaining inefficient projects from the previous term due to ideological obligation and budgetary necessity.
- External Factors: The global uncertainty caused by US President Donald Trump’s tariffs, which have a more significant impact on Mexico due to interdependence in various sectors.
- Internal Imbalances: The urgent need to correct fiscal imbalances and manage growing public debt relative to GDP, not forgetting PEMEX.
- Centralization and Confidence: The shift towards a more centralized model with authoritarian undertones inevitably affects confidence.
Discussing whether Mexico’s economy, given the recent Inegi data, is in a recession is somewhat futile. Various indicators suggest that some economic activities are more resilient than others.
However, even the most ardent government supporters cannot deny that growth expectations have dropped, not just for this year but also in the future.
New Growth Reference
The critical question is, what is the new inertial growth level of the Mexican economy? If 2% annual growth was considered acceptable during the so-called neoliberal era, should we now accept López Obrador’s 0.8% as the new benchmark?
