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Feature 090715 Pazos

Monday, September 7, 2015

Has Mexico Advanced, or Backtracked, with Enrique Peña Nieto?

By Luis Pazos

Halfway through the current government, three of six years, a war of numbers has started in order to show that we are better off or worse off than before the arrival of the current administration. The principal macroeconomic variables: inflation, employment, growth, devaluation, deficit, are adjusted to show how we improve or worsen. But we ask the majority of Mexicans how are their finances: better or worse?

External variables have adversely affected the current government, according to officials. It is not the same to govern with an oil price of nearly US$100 than with one at less than US$40. But now, growth in United States, the main engine that helps Mexico's growth, is higher than in the final years of the past six year administration, when, in 2009, we suffered the worst world recession since 1929.

The Labor Ministry has published figures showing that real wages increased due to a drop in inflation, whereas INEGI shows that household income fell 3.5 percent in 2013 and 2014.

Growth in the final year of President Calderon (2012) was 4.0 percent; now we are running at 2.0 percent. The accumulated depreciation in the administrations of Fox and Calderón, 12 years, was 17 percent, while in these first three years of Enrique Peña Nieto it is almost 30 percent.

My perception is that the current government, by giving more importance to winning elections, neglected and put off (growth) while facing an expected drop in oil prices, balancing its finances through a reduction in public spending since 2014. They tried to balance (finances) with more taxes, which is the main cause, not external factors, for low growth and the drop of income in Mexican homes.

We wagered that the Mexican economy would improve; that it would take advantage of the recovery of the United States, the destination for most exports. But to achieve this, it is necessary to reduce tax burdens, public spending, overregulation and corruption.

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Luis Pazos (e-mail: lpazos@prodigy.net.mx), who heads the Free Enterprise Research Center (CISLE) in Mexico City, holds a master's degree in Public Finance and a doctorate in Law from the National Autonomous University of Mexico (UNAM).  A prolific writer and forethoughtful analyst, Dr. Pazos' commentaries on Mexican economics, finance and politics have appeared in newspapers and magazines throughout the Americas.  As well, he is the author of numerous books.

Edited translation by MexiData.info

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