World News

Business groups say Mexican plans to boost economy are insufficient

By Anthony Esposito

MEXICO CITY (Reuters) – Mexico’s most powerful business lobbies said on Monday that President Andres Manuel Lopez Obrador’s plans to lift the Mexican economy out of a coronavirus-induced crisis were insufficient and more was needed to protect jobs and companies.

If the government does not back the private sector, Mexico risks a deep recession that could see Latin America’s second-largest economy contract 7% and shed between 1 million and 1.2 million jobs, according to the Business Coordinating Council (CCE), an association representing the private sector.

Lopez Obrador unveiled his plans on Sunday, vowing to help the poor and create jobs. But his promise to uphold fiscal discipline at the same time sparked criticism that the measures fell far short of what was needed.

He pledged Mexico would create 2 million jobs in the next nine months and boost small-business and housing loans. He also vowed to tighten public-sector austerity to avoid debt.

“I’d like someone to ask the government how they are going to create 2 million jobs in nine months under these circumstances and how much is it going to cost and where is the money going to come from to create those 2 million jobs,” said Carlos Salazar, head of the CCE.

Salazar said the private sector created most jobs.

“The public sector invests 1 peso for every 9 pesos that are invested in our country, so to think that public investment is going to create that number of jobs is a goal that definitely looks unattainable,” Salazar said.

Lopez Obrador’s speech coincided with growing calls for his government to emulate the United States and European nations with a major stimulus and relief package.

Governments worldwide have unleashed unprecedented spending pledges to minimize damage to their economies from the coronavirus, including a $2 trillion package by Mexico’s top trading partner, the United States.

“We’re very disappointed we didn’t hear the president mention in his speech yesterday the necessary measures to be able to get out of the economic crisis as soon as possible,” said Nathan Poplawsky, the head of Mexico City’s national chamber of commerce (Canaco).

(Reporting by Anthony Esposito; Editing by Dave Graham and Peter Cooney)