By SILVIO CANTO, JR.
Over the last few months, I’ve heard two things consistently from Mexican friends in the United States:
First, President Andrés Manuel López Obrador (AMLO) is currently benefitting from a nice honeymoon with the Mexican people, and second, sooner or later, he is going to be tested when the economy starts to slow down. The point is that investors and business people are concerned about his leftist tone.
Well, maybe that test is already here. Maybe the Mexican economy is finally slowing down, throwing AMLO a curveball.
According to the Wall Street Journal:
“The Mexican economy contracted in the first quarter from the end of last year, a challenge for the six-month-old government of President Andrés Manuel López Obrador, who is aiming for growth to average 4 percent (per annum) during his six-year term.
Gross domestic product, a measure of output in goods and services, fell 0.2 percent in seasonally adjusted terms from the fourth quarter of 2018, (Mexico’s) National Statistics Institute said. The result was unchanged from the institute’s preliminary reading at the end of April.
Industrial output fell 0.6 percent, while services contracted 0.2 percent and agricultural production rose 2.6 percent from the previous quarter.
The statistics institute also revised down growth for the fourth quarter of 2018 to practically flat from 0.2 percent.”
As always, there are “official explanations,” such as gasoline shortages, the fuel theft from the pipeline crisis, some labor strife at manufacturing plants in the north and teachers blocking railways for several weeks at the start of the year.
I’m sure that those are real factors. However, the U.S. economy was expanding during most of last year. I don’t recall a slowdown in the Mexican economy when the United States was booming. In other words, the two economies are very much connected.
So let’s see where the Mexican economy stands in another six months. AMLO will need lots of growth to finance his promises. So far, he is not getting it!