All of a sudden everybody is so pessimistic in Mexico
Have you spoken to anyone in Mexico's middle or professional class lately? I have and I'm hearing a lot of pessimism in their voices.
Back in 1994, Mexico went through a horrible time when the peso was devalued and the economy hit the wall. Everybody was very pessimistic back then. The county recovered rather well, in part because of the leadership of President Ernesto Zedillo and the U.S. boom in the late 1990s.
Over the last few weeks, I sense that pessimism is back. In other words, Mexicans are worried about the country's future, especially the middle class. My friends see a lot of dark clouds, from the economy to the value of the peso and specially the criminality that hits more and more families. No one has anything positive to say.
Add to this El Chapo's escape and people are really worried.
President Enrique Pena Nieto's "informe", or sort like the State of the Union address, will not settle doubts or concerns. Again, people are really worried.
This is from the New York Times:
In the days leading up to his state of the nation speech on Wednesday, his administration has blitzed news media outlets with ads extolling the changes, which include rules to rein in powerful private telecommunications companies and an end to state control of the energy industry. The campaign repeats the pledge that investment and jobs are coming.
But that story is beginning to look thin.
Growth has been slower under Mr. Peña Nieto’s presidency than the annual 2.3 percent average in the two decades before he took office. In the last couple of weeks, both the central bank and the Finance Ministry have reduced their forecasts, suggesting that growth in 2015 may not reach that figure either.
Salaries are stagnant, while recent studies show that inequality and poverty have increased over the past few years.
Now, just when Mexico might have begun to see the first concrete benefits of the economic revisions, the economy is being pummeled by forces beyond the government’s control as global financial uncertainty mounts.
The peak of the wave of constitutional changes that Mr. Peña Nieto maneuvered through a divided Congress in his first three years was opening the oil, gas and electricity industry to private investment, reversing the nationalization of the country’s oil industry 75 years ago.
The timing could not have been worse. The collapse in oil prices all but halted the predicted rush by international oil companies into Mexico and will force the government, which relies on oil revenue to fund at least a third of its spending, to make significant cuts in social and infrastructure programs next year.
The first auction for offshore oil exploration blocks in July drew so few bids that only two of the 14 on offer were awarded. Regulators have relaxed the conditions for coming bids, but the billions in investment that the government promised seem even further off.
To be fair, President Pena Nieto's energy reforms were very important even if most Mexicans don't see the benefits yet. Eventually, they will attract foreign investment in the future. He deserves credit for it.
President Pena-Nieto's problems are rooted in a sense that he's not on the top of the job. He comes across a bit aloof and detached from the country's problems. His aloof reaction to the disappearance of the 43 students left many speechless. His unwillingness to hold someone accountable for El Chapo's escape does not help either.
Mexico's ship of state is headed for some very choppy waters. As is true here, a lot of middle- class Mexicans are disenchanted with the political class. They think that the politicians are just out to take care of themselves. They believe that the economy is rigged in favor of the elites and well-to-do. Last but not least, they believe that the system has failed them, especially the middle class.