Mexico’s radical president serves up economic mediocrity

MEXICAN PRESIDENTS tend not to get the economy off to a flying start when they first take office. The past six leaders saw the economy shrink by an average of 0.4% during their first year, but went on to enjoy growth of 3.5% in their sixth and final one (see chart). So likely are governments to enrich their allies at the expense of everyone else that each transfer of power causes investors to hang back until they know where they stand. So it may not be a shock that Mexico will barely grow in 2019, the first year of Andrés Manuel López Obrador’s presidency. But economists worry that the malaise might linger this time.

Mr López Obrador rode to power on the back of popular outrage against the status quo. The left-leaning populist wants to centralise power, boost the scope of the state and balance the books—all while hitting annual GDP growth of 4%, “double the growth achieved in the neoliberal period”.

The list of headaches is long. Consumer confidence, which rocketed after Mr López Obrador’s inauguration, has slumped. Manufacturers are struggling: in the past year capital-goods imports are down by 16% in dollar terms, the biggest drop since the global financial crisis. The pace of formal job creation has decelerated over the past year. Economists have repeatedly slashed growth forecasts.

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via The Economist: Finance and economics Business Feeds

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