Three and a half years after AMLO, a pandemic and a war, this is how Mexico is in economic and social terms

he Mexican economy is going through a difficult time, although with its peculiarities, it follows the general trend of turbulence and is pressured by external factors that have hit almost all countries and their inhabitants. Although the phenomenon is global, the responses of governments have to a certain extent determined the pace and conditions of the economic recovery.

The administration of Andrés Manuel López Obrador is three years and six months old. In the middle came the Covid-19 pandemic that revolutionized economic, labor and social trends around the world. And when it seemed that vaccines had managed to open the door to a “new normal”, Russia invaded Ukraine, which has had a significant impact on all countries.

From the first year of López Obrador’s official management, the first changes and transformations in public policies began, the construction of the new Felipe Ángeles airport, which is already operating today, the construction of the Mayan Train, the labor reform in terms of outsourcing, the energy reform that has encouraged activity in refineries, the great social programs (Youth Building the Future, doubling transfers to the elderly and the historic monetary aid for people with disabilities), incentives to the countryside, and the list goes on these three and a half years.

Between mistakes, successes and external pressures, the simplest thing is to say that the panorama is one of chiaroscuro and, although it is so, the reality is a little more complex. On the one hand, some progress was observed in social matters in his first year in office and improvements in economic indicators such as the exchange rate, consumption and public debt. But, on the other hand, the crisis of violence continues to be a challenge, prices continue to rise and social achievements are at risk. Stabilizing the economy and putting “the poor first” gets tough.

Inflation, relentless

So far in 2022, one of the most worrying indicators is the inflation rate, which stood at 7.65% during May, according to the Inegi. With this result, 18 months were added following a growing trend, which does not seem to stop. In Mexico, these levels of inflation have not been seen since 2001 and are explained by the fact that agricultural products and processed foods are the generic ones that have become more expensive, pushing up the INPC (National Consumer Price Index).

The rising price trend is a combination of multiple external factors, from the mismatch between supply and demand resulting from the Covid-19 crisis, to the global shortage of raw materials, the turbulence in supply chains around the world and obstacles in international trade due to political and military conflicts.

But although it is a global problem, in countries with such wide inequality gaps, the blow is differentiated. The poorest households are the most affected: during May, the basic food basket in rural areas increased its cost by 11.9%, according to Coneval figures. At the same time, the poorest households would face an inflation rate one percentage point higher than rich households, the IMCO estimated.

Hand in hand with the loss of purchasing power, there have been increases in the levels of working poverty, the historical increases in the minimum wage applied by the Ministry of Labor since the beginning of the Moreno administration have been overshadowed by this inflationary trend, the aftermath of the economic crisis caused by Covid-19 and the reformulation of the labor market.

In this sense, it has been observed that unemployment has been one of the variables that has behaved best during these years of management, reaching a level of 3.1% of the PEA during April 2022, according to figures from the National Survey of Occupation and Employment of the Inegi.

The underemployment rate remains relatively high, which suggests that the need for employment remains latent.

In general, the Mexican economy remains weak and the behavior of the GDP confirms this: during this first half of 2022 it grew just 1.0% compared to the previous quarter and in the year-on-year analysis it barely achieved a jump of 1.8% in real terms.

Some experts speak of stagflation and others point out that it is still too early to diagnose it in Mexico. The truth is that Mexican families are feeling the effects and the government is still trying to contain them.

Violence, pending

One of the phenomena that the AMLO government has not been able to manage is the crisis of violence. The murders of journalists and human rights defenders, femicides and intentional homicides continue at alarming numbers.

Homicides have barely managed to remain at levels between 33,000 and 34,600 each year, according to data published by the SESNSP (Executive Secretariat of the National Public Security System). And femicides each year have scored a new record. So far in 2022, at least 11 journalists are known to have been murdered.

Mexico faces fear and uncertainty: 7 out of 10 Mexicans feel afraid to live in their localities, reflected the National Survey of Urban Public Security. And among the main concerns of families is the increase in prices, according to consumer confidence indices. There are still great challenges for the next two and a half years.

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