The situation for the Mexican economy is, at least, complex. According to the forecasts, the closing of the year could be worse than expected. A situation that could lengthen at the beginning of the year, causing a recession in the country.
The Mexican economy will not start the year as well as some expected. Despite the estimates made by Andrés Manuel López Obrador (AMLO), the Mexican economy has not reached 2% or far. And, according to the end of the year forecasts, the Mexican economy will close the year with a growth that oscillates between the decrease (-0.2%) and the very slight growth (0.2%). In both cases, as I said, not far from that 2% that was issued from the government itself.
The greater deterioration that the Mexican economy has experienced, due to worse performance of certain items, as well as the dubious management carried out, has ended up completely ballasting the Mexican economy. An economy that hopes to go through 2019 in the same way it started; that is, with zero growth. A growth that, according to the forecasts, could lead to it starting 2020 with a technical recession, registering contractions in GDP.
And, in a scenario in which there were a greater deterioration and pessimism seized the economy, if this contraction of -0.2% occurred, we could face the possibility that, together with a first-quarter with contractions in GDP, the Mexican economy is in what economists call technical recession; a recession caused by contractions in GDP for two consecutive quarters. A situation that, in turn, could put a very weak economy in serious trouble.
Mexico, despite the work done, needs more government action. The weakness of the institutions is one of the main problems facing the country. According to the records, public revenue remains insufficient to increase public investment; which, with drops in consumption, industry, construction, puts the country in a difficult scenario for the beginning of the year. A scenario that must be tackled with greater integrity than the year has faced, as well as with more rigor and a good dose of reality.
Since the preparation of the budget plan, the Mexican economy had many vulnerabilities. Very optimistic forecasts of the president are also part of the fault of the malaise that Mexico is experiencing. And, as we remember, only in the income forecasts that the agency marked, we could already see the gap between reality and government estimates. Provisions that did not conform to any possible scenario, and that have ended up breaking the deterioration experienced.
But the worst is yet to come. And, the slowdown in the Mexican economy may not have hit bottom yet. That is, we could face a situation in which the economy, despite the poor results, could still be more affected. A situation in which these variables that have caused these bad records, may suffer further deterioration. In such a situation, as I say, we could face this technical recession, which would hinder the road for a country that has struggled to get out of that quagmire it is going through.
The quagmire that is already beginning to worry Mexican citizens, because in terms of employment, the country is going through a complex situation. Job creation in Mexico is paralyzing. The country is seeing a sharp decline in job creation in different sectors, given their worst behavior. This affects, of course, citizenship. Since, if we look at unemployment levels, we can see how in recent months, the country has experienced increases in the unemployment rate. A situation that, with zero growth, reduces opportunities for a country.
The situation for Mexico, at the moment, is, at least, difficult. Next year, at its beginning, it could continue to lengthen the malaise of the Mexican economy; However, it is expected that this discomfort does not exceed the first quarter and we will see more dynamism at the beginning of the second quarter. A situation that, however, is not good for the country, because we still do not know how these variables will evolve and the harmful impact they will have at the beginning of the year. An impact that could put, even more, against the ropes to the Mexican economy, as well as its leaders.
To this, we add the situation of corruption. One of the great promises of President AMLO and that, at the end of the year, seems to have not been fulfilled as much as they promised. The different cases of corruption in the country, from García Luna to the son of Chapo Guzman, have splashed the Mexican Government on the international stage. And, given the events, he has questioned, questioning completely, the ability of the President, as well as his government team, to end corruption in the country. A corruption that, as we have always said, remains one of the great ballasts of the Mexican economy, as well as a clear detractor for the international confidence that the country needs for attracting investments.
Source: forbes mx
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