The Mexican economy throws AMLO

Over the last few months, I've heard two things consistently from Mexican friends:

First, President Andres Lopez-Obrador (or AMLO as they call him south of the border) is benefitting from a nice honeymoon with the Mexican people; and,

Second, sooner or later, he is going to be tested when the economy slows down.   The point is that investors and business people are concerned with his leftist tone.

Well, maybe the test is here.  Maybe the Mexican economy is finally slowing down, throwing AMLO a curve ("una curva").

This is from the Wall Street Journal:    

The Mexican economy contracted in the first quarter from the end of last year, a challenge for the six-month-old government of President Andrés Manuel López Obrador, who is aiming for growth to average 4% during his six-year term.

Gross domestic product, a measure of output in goods and services, fell 0.2% in seasonally adjusted terms from the fourth quarter of 2018, the National Statistics Institute said Friday. The result was unchanged from the institute’s preliminary reading at the end of April.

Industrial output fell 0.6%, while services contracted 0.2% and agricultural production rose 2.6% from the previous quarter.

The statistics institute also revised down growth for the fourth quarter of 2018 to practically flat from 0.2%.

As always, there are "official explanations", such as gasoline shortages, the fuel theft from pipelines crisis, some labor strife at manufacturing plants in the north and teachers blocking railways for several weeks.

I'm sure that those are real factors.  However, the U.S. economy was expanding during most of last year.  I don't recall a slowdown in the Mexican economy when the U.S. was booming.  In other words, the two economies are very much connected.

So let's see where the Mexican economy stands in another six months.  AMLO needs lots of growth to finance his promises.  So far, he is not getting it!

P.S.  You can listen to my show (Canto Talk) and follow me on Twitter.

Over the last few months, I've heard two things consistently from Mexican friends:

First, President Andres Lopez-Obrador (or AMLO as they call him south of the border) is benefitting from a nice honeymoon with the Mexican people; and,

Second, sooner or later, he is going to be tested when the economy slows down.   The point is that investors and business people are concerned with his leftist tone.

Well, maybe the test is here.  Maybe the Mexican economy is finally slowing down, throwing AMLO a curve ("una curva").

This is from the Wall Street Journal:    

The Mexican economy contracted in the first quarter from the end of last year, a challenge for the six-month-old government of President Andrés Manuel López Obrador, who is aiming for growth to average 4% during his six-year term.

Gross domestic product, a measure of output in goods and services, fell 0.2% in seasonally adjusted terms from the fourth quarter of 2018, the National Statistics Institute said Friday. The result was unchanged from the institute’s preliminary reading at the end of April.

Industrial output fell 0.6%, while services contracted 0.2% and agricultural production rose 2.6% from the previous quarter.

The statistics institute also revised down growth for the fourth quarter of 2018 to practically flat from 0.2%.

As always, there are "official explanations", such as gasoline shortages, the fuel theft from pipelines crisis, some labor strife at manufacturing plants in the north and teachers blocking railways for several weeks.

I'm sure that those are real factors.  However, the U.S. economy was expanding during most of last year.  I don't recall a slowdown in the Mexican economy when the U.S. was booming.  In other words, the two economies are very much connected.

So let's see where the Mexican economy stands in another six months.  AMLO needs lots of growth to finance his promises.  So far, he is not getting it!

P.S.  You can listen to my show (Canto Talk) and follow me on Twitter.