Sunday, June 16, 2024

AMLO’s chief of staff: first-quarter numbers ‘a little slap’ but his boss disagrees

An economic contraction of 0.2% in the first quarter of this year was nothing more than “a little slap” for the government, according to the president’s chief of staff, who rejected that Mexico is in recession.

Alfonso Romo told reporters yesterday that Mexico had “three complicated months” to start the year, specifically citing delays at the border with the United States in March that cost exporters millions of dollars.

However, he added that the government is “very optimistic” that the economy will pick up because the private sector is strong.

“So, this year, perhaps, we’re going to grow by between 1.6% and 1.7%, it’s very difficult to say now but we’re working on how to change the curve . . .” Romo said.

Asked whether Mexico was in recession as implied by the president of the National Institute of Statistics and Geography (Inegi), President López Obrador’s chief of staff responded: “I don’t see it, I honestly don’t see it in the numbers at all.”

Mexico dropped to No. 25 on the Kearney index.
Mexico dropped to No. 25 on the Kearney index.

Romo, a business tycoon and former Olympic equestrian, added: “What’s important is to look at the trend. This first quarter, we were given, what’s it called, a little slap. It’s like when you ride a horse, [if you fall] you get on again to jump better.”

At his morning press conference today, López Obrador said he didn’t agree with Romo’s “little slap” remark.

“I maintain that the economy is very good,” he said, declaring that rather than being slapped, the government is delivering its own backhanders to those involved in corruption.

“. . .We’ve given a slap to the corrupt, that’s right, with a white glove,” the president said.

López Obrador also rejected a new report by global management consulting firm A.T. Kearney, which ranked Mexico 25th in its Foreign Direct Investment (FDI) Confidence Index, a decline of eight places compared to last year.

“Where does this fall in foreign investment come from? How can it be that we fell eight places in five months?” he asked.

In its report, A.T. Kearney explained that even though Mexico lost eight places in its index – which ranks the markets likely to attract the most investment in the next three years – the country’s score actually rose, indicating that it remains attractive to investors.

“The decline, therefore, is more reflective of an increasingly competitive FDI environment rather than a souring of investment intentions for Mexico,” the company said.

However, it noted that the International Monetary Fund (IMF) and the Secretariat of Finance (SHCP) have both recently downgraded Mexico’s growth outlooks for this year and next.

“These growth concerns dovetail with the rhetoric of President Andrés Manuel López Obrador, who has challenged the privatization of key sectors of the Mexican economy, including the crucial energy sector,” A.T. Kearney said.

“Furthermore, in early 2019, the Mexican central bank warned that slowing investment and labor strikes, among other challenges, were weighing on its growth forecast.”

A.T. Kearney also noted that credit rating agencies are downgrading the country’s credit rating outlook.

“Contrary to these headwinds, however, the signing of the USMCA free trade agreement has given investors a sense of greater policy stability in the North America economy,” the company said.

“Mexico has made a concerted effort to expand its trading relationships . . . Such efforts indicate to investors that Mexico will remain open to the global economy and is actively seeking to diversify its trade and investment relationships.”

Source: Milenio (sp), El Financiero (sp) 

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