From the government it is frequently heard that the national economy is doing very well.
Despite the null economic growth, the official discourse always “has other data”.
It also has other projections. By the end of this year 2023, it projects a growth rate of 3%, which contrasts with the 1.8% of most private analysts.
Consequently, the question is: why, if we are doing so well, are we doing so badly?
The Center for Economic Studies of the Private Sector (CEESP), of the Business Coordinating Council, in its last weekly note, says it clearly and without consideration:
“The government narrative is confusing. It is stated that ‘it is going very well’ but the real economy is not growing enough and investment is lagging far behind.
The results in terms of social welfare have been negative and fiscal pressures are accumulating”.
To support the official perspective on the supposed positive behavior “the stability of the exchange rate, the supposed absence of public indebtedness and partial recovery data from the IMSS records as an indicator of employment are highlighted. And at the same time, the lack of growth, the lag in investment and the downward resistance of underlying inflation, among other problems, are ignored”.
The CEESP’s diagnosis is crude: “the results of this government show a serious deterioration of the real economy and there are important signs of fiscal unsustainability in the future, with a high fiscal deficit, rigid downward spending and exhausted precautionary reserves.”
Faced with official optimism, for the private analysis group, reality has a harsher face.
The recovery of the Gross Domestic Product (GDP) is particularly slow, he points out.
“GDP in 2022 is still below 2018 and its recovery has been slower than in virtually all emerging economies of comparable size. In per capita terms, GDP is 5% below its 2018 level. Investment, the engine that sustainably drives GDP, in 2022 was more than 8% lower than in 2018.”
In addition, the risks are increasing for public finances: “fiscal pressures have accumulated as precautionary treasury resources have run out, with the high level of spending mainly dedicated to unconditional transfers, with investment projects and bailouts of lines of activity of public companies without clear social returns, when public revenues have grown less than in previous periods”.
Regarding the results in social welfare, the CEESP asserts that they have been negative: “less coverage and quality of health services, more poverty, less quality of education and greater public insecurity, among many other deficiencies.
All this has been accompanied by damage inflicted on numerous and important State institutions, whose value is their autonomy and counterweight to public policies, and by numerous measures and positions and actions of the administration that violate agreements with our main partner countries and, as well as the certainty and legal certainty of national and foreign investments”.
The private think tank emphasizes that: “relocation is the best opportunity, perhaps the only one, to achieve sustainable growth that allows for greater social welfare.”
However, it also warns that initiatives to change the Mining Law and administrative provisions generate uncertainty and legal insecurity.
The latter, “reform 23 laws, thereby expanding the discretion of the authority to the detriment of the legal security of individuals and the certainty for investment, by generating total uncertainty in contracts with the government, when many investments depend crucially theirs.”
CEESP’s analysis is rigorous and accurate. From what he warns, the economy is not only in bad shape because it is not growing, but it could get worse, due to decisions against private investment and the growing weakness of public finances. to time.
