Macroeconomic stability, structural reforms, and sluggish growth: The Mexican economy since 2008–2009 and the lessons of 2015

ABSTRACT

This paper examines the evolution of the Mexican economy since the crisis of 2008–2009. It focuses on the main economic indicators of the period and then turns to the changes in economic policy adopted by Peña Nieto’s government since late 2012 and the scope and shortcomings so far of these reforms. It then looks in detail at what happened in 2015, a year characterized by a deterioration of the external environment and by a number of puzzles. Finally, it addresses the short and medium term prospects of the economy under the present set of economic policies and the changes required to put the economy on a higher growth path.

KEYWORDS:

• Growth
• Mexico
• structural reform

JEL CLASSIFICATIONS:

• E00
• N10
• O11

Notes

¹On the employment gap, see Blanchflower and Levin (2015), who, unlike our measure in Figure 2, adjust the employment gap for the degree of underemployment.

²For a recent analysis, see Moreno Brid et al. (2016).

³See Cantú, Ramones, and Villarreal (2016), who illustrate the role of the rate of economic growth in the current and future path of the public debt ratio for the Mexican case.

⁴The Inter-American Development Bank shares the same view in the context of Latin America as a whole (see Pagés, 2010).

⁵With all this I do not mean to deny the important social benefits that reforms can bring in the areas of education, the labor market, economic competition, or overcoming institutional failures. Who can oppose improving the quality of education or strengthening the rule of law? My argument is simply that these reforms, no matter how important, do not deserve the central place that they have been given in the agenda necessary for recovering a more dynamic growth process.

⁶Hedging continues in 2016 (at $49 a barrel of oil) but its effects will be less than in 2015.

Additional information

Notes on contributors

Jaime Ros

Jaime Ros is affiliated with the Faculty of Economics, National Autonomous University of Mexico (UNAM). The author is grateful for comments on a previous version of this article from Jose Luis Oreiro and other participants at the CEDES-PUCP workshop in Lima, May 2016.