The INEGI released the GDP for the fourth quarter and, consequently, for all of 2021. Obviously, the news is not good. From the outset, the data for the fourth quarter, zero growth compared to the third quarter with figures adjusted for seasonality, confirms that during the second half of the year the economy stagnated and that what was recorded during the second quarter was only an ephemeral and weak rebound. With the information for the entire year, we have that the GDP level as of the fourth quarter of 2021 is the same as that registered in the third quarter of 2016; five years lost, even greater if we see it in terms of GDP per inhabitant.
On the other hand, also with figures adjusted for seasonality, during the first three years of the government of President López the growth rates were -0.1, -8.4 and 5% percent. As can be seen, the rebound in 2021 was not even close to what was required to recover what was lost during the previous year.
There are two elements that come into consideration to explain the more than mediocre performance of the economy during the last three years. The first was the decision not to implement a countercyclical fiscal policy during 2020 in response to the dual negative shock of supply and demand caused by the covid pandemic, as was done in most countries. It is worth highlighting, for example, the difference in the evolution of the Mexican and US economy in the face of the same shock; the Mexican contracted during the second quarter of that year by 17.9%, while the United States fell by 8.9 percent. Furthermore, the Mexican GDP in the fourth quarter of 2021 was 2.5% lower than that of the first quarter of 2020 (before the pandemic), while the US GDP was already 4.6% higher. Obviously, the fiscal decision made by the Mexican government deepened the fall in 2020, which left the economy in a weak situation and hence the short-lived rebound in 2021.
The second, more relevant, is the lawsuit that President López has with the entire private sector, not just the companies. His anachronistic and nonsensical idea that every decision and action by a private economic agent must be subordinated to an indefinable and therefore unattainable “common good”, makes him despise everything private, from the company that requires legal certainty to to operate and even more so to invest even the family unit that seeks to have better jobs, more personal and patrimonial security, a better education for their children and better health services for all.
Obviously, with that attitude that everything must depend on the State, that everything that comes out of the State is “good” and simultaneously everything that the private sector does is despicable and even “bad”, coupled with an increasingly inefficient and poor formulation and implementation of public policies, the only thing it leads to is mediocrity in the performance of the economy as a whole.
Even supposing (heroic assumption) that the government will make the socially correct economic decisions in regulatory terms and allocation of public spending, it is clear that the economy cannot grow in a high and sustained manner without the majority contribution of private investment. The scenario worsens if the government, in addition to doing things wrong, the president dedicates himself, as he has done in the three years he has been in office, to destroying the institutional framework.
I would like to be optimistic and think that with the evidence of three years of wrong decisions, the president would be willing to change the strategy and accept that not only is a more efficient government with competent collaborators required, but that the private sector matters and matters a lot. However, we must be realistic: the president will not correct, he will become more radical and the destruction will continue.
on the sidelines
It is no longer the confrontation between communism and capitalism, it is one of autocratic regimes and liberal democracies. It is time to decide which side you want to be on: subjugated or free; abstaining is not an option.
Twitter: @econoclasta
Economist and professor
Point of view
Knight of the National Order of Merit of the French Republic. Medal of Professional Merit, Ex-ITAM.