4% GDP growth: A challenge for AMLO

The incoming government will have to guarantee stability in order to hit the 4% GDP growth goal

4% GDP growth: A challenge for AMLO
Experts agree that it is necessary to improve working conditions by providing better salaries and benefits for employees - Photo: Alejandra Leyva/EL UNIVERSAL
English 30/11/2018 16:48 Rubén Migueles Mexico City Actualizada 16:50
Guardando favorito...

One of the main challenges for Andrés Manuel López Obrador’s government will be to foster the country’s economic growth to hit the goal of 4% GDP growth, a level that has not been reached since the presidency of Carlos Salinas de Gortari.

From the presidential administration of Ernesto Zedillo to Peña Nieto’s six-year period, Mexico’s Gross Domestic Product (GDP) moved to an average rate of 2.4%.

After winning the presidential election for the period of 2018-2024, López Obrador made a commitment in presence of the Mexican Chamber of Industry (CONCAMIN) to foster development in the country so that the GDP would rise to an annual rate of 4%.

“One of the main challenges is economic growth, since a lack of wealth creation is often associated with poverty, informality, and low tax collection levels,” stated the director of the Industrial Development and Economic Growth Institute (IDIC), José Luis de la Cruz.

Aníbal Gutiérrez, an investigator from the Faculty of Economy at Mexico’s National Autonomous University (UNAM), claimed that another challenge would be to generate a dynamic of public and private investment that would enable an annual growth of 4%.

“This is fundamental, since it would allow to increase tax revenues and provide more support for the social programs that the incoming administration has proposed,” he claimed.

“Another challenge related to the economy will be how they plan to strengthen government income without introducing a tax reform,” he added.

A climate of trust

The government of Andrés Manuel López Obrador will have to guarantee financial certainty and stability, particularly regarding the exchange rate, which is a key point to foster both domestic and foreign investment, according to specialists.

“The challenge will be to find a formula that guarantees that investments made in Mexico actually stay in the country while stimulating more foreign investment,” stated Gutiérrez.

Gabriela Siller, an analyst from Banco Base, explained that private investment, be it domestic or foreign, depends on expected future profits in the country. For as long as uncertainty reigns, the country will not grow.

The specialist added that market confidence favored stability in the exchange rate, which serves as a thermometer for economies around the world.

The need for better wages

Regarding Mexico’s job market, experts agree that it is necessary to improve working conditions by providing better salaries and benefits for employees while changing the business environment for the benefit of small and medium-sized companies.

Some of the top priorities should be the fight against poverty, informality, and corruption, as well as fostering social and economic equity. The incoming government will have to improve productivity and competitiveness, commented De la Cruz.

“The first six months of government will be tricky since certain adjustments will be made. I see an uncertain future in the incoming administration’s capacity to coordinate and provide results,” Gutiérrez concluded.
 

dm
 

Guardando favorito...

Recomendamos