16 | DIC | 2019
GDP: unfulfilled promises
Enrique Peña Nieto and Luis Videgaray, Mexico's former President and the former Secretary of Finance - Photo: File Photo/EL UNIVERSAL

GDP: unfulfilled promises

31/01/2019
09:21
Mexico City
Editorial
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The previous administration boasted that 11 reforms that are “transforming and fundamental for the political, economic, and social development” took place in only 18 months

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Every country should generate wealth so that it benefits the population. How do we know if this is the case? The most common way to learn if a country's economy is growing or if it is contracting is the measuring of the gross domestic product (GDP), which is the combined value of all the assets, services, and investments that are produced in the country during a year.

In Mexico, since the beginning of the 21st century, it's been said that the country needed essential reforms to promote economic growth.

After several unsuccessful attempts, the changes materialized during the previous administration; since the beginning of the administration, several modifications of the law were approved in areas such as education, energy, communications, finances, the operation of autonomous bodies, and other areas.

The previous administration boasted that 11 reforms that are “transforming and fundamental for political, economic, and social development” took place in only 18 months.

The keynote address noted that by the end of that administration, in 2018, Mexico's economy would reap the benefits of the reforms approved. After the deadline, the first reports issued by the INEGI indicate that the forecasts for economic growth, which calculated to be of 5% for 2018, were far from what was expected. During the last trimester of 2018, the economy's rhythm decelerated and only advanced 0.3%, less than during the previous trimester, which registered 0.8%. The 2018 GDP growth rate was of 2%, the lowest growth in the last five years.

It's impossible to escape from external factors, which always influence the economic performance but the decisions or omissions made by those in power can result in incentives for the private industry, the main generator of jobs and wealth, so that it trusts the administration and allocates resources to productive projects.

It's clear that reforms are not enough to improve the economic development of any country. In recent years, Mexico has faced two challenges that have slowed down economy: corruption and a weak rule of law. A long as there aren't developments in these areas, the reforms implemented won't be useful.

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