MEXICO CITY (Reuters) – Mexico’s economic system will probably develop by 4.6% subsequent yr, in line with a draft funds proposal printed on Tuesday, suggesting the street to restoration will likely be lengthy and arduous for one of many international locations worst hit by the coronavirus pandemic.
Mexico faces a tough balancing act of reviving an economic system battered by the pandemic whereas additionally sticking to President Andres Manuel Lopez Obrador’s dedication to austerity.
The finance ministry draft, which was made public by officers on the decrease home of Congress, additionally predicts that Mexico’s major funds stability – the calculation which excludes curiosity funds on current debt – will likely be nil subsequent yr.
Lopez Obrador is an outlier amongst each rich and rising nations, insisting on maintaining spending tight even within the face of the financial destruction wrought by coronavirus lockdown.
The economic system he promised to revive is within the deepest stoop for the reason that 1930s Nice Melancholy. Mexico’s central financial institution lately warned it may contract by 13% this yr.
Finance ministry officers are resulting from current the funds plan to the decrease home in a while Tuesday, and buyers in each Mexico and the debt of ailing state oil firm Petroleos Mexicanos will scrutinize spending priorities.
Whereas regional peer Brazil has splurged an extra 6.5% of GDP on spending together with unemployment advantages that attain a 3rd of its residents, Mexico’s spending stability has deteriorated by lower than 1% in the course of the pandemic.
Lopez Obrador has given no signal of fixing course, arguing his self-discipline will finally go away more healthy funds, whereas ruling out extra taxes or new social applications.
Mexico was already in a recession earlier than the pandemic.
Within the central financial institution’s most optimistic situation, Latin America’s second-largest economic system will likely be smaller on the finish of subsequent yr than earlier than the pandemic roiled the Americas.
Reporting by Diego Oré and Stefanie Eschenbacher; Extra reporting by Sharay Angulo and Abraham Gonzalez; Modifying by Frank Jack Daniel