Introduction
Economic stability is not measured by blind faith in the government, but rather by the assurance that one can pay their rent at month’s end, according to Macraf. However, recent statements by the head of the Economic Planning Unit within Mexico’s Ministry of Finance suggest otherwise.
The Role of Economic Authorities
Economic authorities are tasked with instilling confidence among investors, businesses, and citizens. This often involves a dose of optimism, exaggerated data, and reassurances that the economy is robust and moving forward. Yet, when data tells a different story, it’s crucial for authorities to acknowledge problems and propose concrete solutions.
Contradictory Statements and Economic Indicators
The current administration seems to misunderstand this role. They downplay the risks of a potential economic recession and place the burden on citizens to face it. For instance, the head of the Economic Planning Unit claimed that Mexican households have sufficient savings to weather a recession, attributing this to recent wage increases and a robust labor market.
However, data paints a contrasting picture. The Mexican Social Security Institute (IMSS) reports only 179,289 new jobs created between January and April 2025, falling far short of the necessary 100,000 monthly jobs for sustained economic growth. At this rate, only half the required jobs have been created, casting doubt on the supposed “solidity” of the labor market.
Furthermore, while the National Inclusion in Financial Services Enquiry by INEGI indicates a 18.9% increase in Mexicans having savings accounts by the end of 2024, this does not equate to sufficient resources for crisis management. Many Mexicans struggle to save despite wage increases due to the adverse effects of recent public policies, such as the healthcare system crisis, which forces citizens to bear expenses previously covered by the state.
Consumer confidence indicators also reflect a decline in expectations. Perceptions of saving possibilities and job stability have dropped over one percentage point annually, while the expectation of maintaining or improving employment has fallen by 2.9 percentage points.
Economic Growth and Inflation
The first quarter of 2025 saw a marginal 0.2% growth compared to the previous quarter and 0.6% annually, both below the 1% threshold, suggesting an impending contraction. The only reason for not entering a technical recession is the growth in primary activities, which increased by 6.7% annually. However, secondary and tertiary activities show negative trimester rates, warranting immediate attention.
Moreover, the inflation rate in the first half of May 2025 stood at 4.22%, surpassing the Banco de México’s immediate limit. This contradicts the monetary authority’s recent decision to lower interest rates, citing insignificant inflationary pressures. This inconsistency generates uncertainty instead of assurance.
Political Posturing vs. Economic Protection
The president’s threat of mobilization if the U.S. Senate imposes a 3.5% tax on remittances exemplifies prioritizing political posturing over economic protection for the most vulnerable households reliant on social programs and familial remittances.
Conclusion: The Burden of Inaction
Ultimately, citizens will bear the costs of inaction as authorities focus on political discourse and electoral clientele. Essential foundations for a more robust and resilient economy are neglected, leaving vulnerable populations disproportionately affected by even minor economic shocks.
Key Questions and Answers
- Q: What does Macraf mean by a solid economy? A: A solid economy, according to Macraf, is one where individuals can confidently meet their monthly expenses, not one based on blind faith in government.
- Q: How do recent statements by Mexico’s economic authorities contrast with economic indicators? A: Authorities claim robust wage increases and a strong labor market, but data shows slow job creation, reduced savings due to increased living costs, and declining consumer confidence.
- Q: What are the implications of marginal economic growth and rising inflation? A: Marginal growth and rising inflation suggest an impending recession, with only primary activities showing positive growth amidst negative trends in secondary and tertiary sectors.
- Q: How does the president’s stance on remittenses tax impact the economy? A: The president’s threat of mobilization over a potential tax on remittances prioritizes political posturing over protecting vulnerable households dependent on these funds.
