OECD Says Mexico Needs ‘Comprehensive Reform’ to Boost Growth
Mexico needs a “comprehensive reform agenda” to boost investment and economic growth, the Organization for Economic Cooperation and Development (OECD) said Monday, Feb. 21.
After cutting its economic forecast for Mexico’s growth expectations for 2022 from 3.3 percent to just 2.3 percent, OECD Secretary General Mathias Cormann, warned that in order to spur higher growth, Mexico would have to take better advantage of its proximity to the U.S. market, which he said has remained “untapped” over the course of the last two decades.
In its 2022 Economic Survey of Mexico, the OECD said that more robust economic growth and more jobs, combined with increased social spending, could help reduce poverty and improve social cohesion.
“Mexico has great potential to become a high-growth economy, with higher living standards for all,” said Cormann while presenting the survey during a virtual event.
“But an ambitious and comprehensive reform agenda would be needed to turn this opportunity into reality.”
Cormann also said that “reviving investment is a challenge for Mexico, since it has remained practically flat since 2015 and quite low since 2019,”
“National and foreign investors must be given certainty about existing contracts and regulatory stability, which would help restart and boost investment,” he said, in obvious reference to President Andrés Manuel López Obrador’s (AMLO) controversial proposed electricity reform, which would prioritize state-run dirty energy sources of private renewable ones.
The OECD annual report stated that “strengthening investment and raising productivity are priorities to accelerate Mexico’s growth and that the uncertainty surrounding the formulation of national policies, such as the electricity reform proposal, have weakened that indicator.”
The OECD leader said that Mexico should prioritize reactivating private investment and reversing low productivity to improve growth potential in the medium term.
He also said that the country needs to improve business regulations, boost competition, reduce informality and corruption, and step up efforts to meet greenhouse gas emission targets.
In response, Mexican Finance Secretary Rogelio Ramírez de la O said the AMLO administration has launched “a comprehensive strategy” that ensures greater economic development while prioritizing social demands, with