Economics: Signs of progress in Sheinbaum’s Plan Mexico but excessive optimism and other faults of past years continue to predominate
Plan Mexico: a National Strategy for Industrialization and Shared Prosperity, which the administration of President Claudia Sheinbaum unveiled on January 13, clearly marks a step in the right direction in terms of planning. Complete with a mission and goals for 2030, actions for January-April 2025, as well as strategies, enablers and coordination, it also includes development poles and goals, as well as actions and projects for nine sectors of economic activity.
However, the Plan is marred by several deficiencies, beginning with extraordinarily ambitious goals and a wildly optimistic scope, raising serious concerns that many of its goals and actions are unfeasible. The Plan features entire strategies and actions that lack any budgetary basis, while its overarching statist approach is apparent, with government intervention assigned an increasingly preponderant role.
Its instruments include protectionist measures that are presumably limited to imports from countries with which Mexico lacks free trade agreements, especially China, a focus that would have limited effects. Promises of greater and more expeditious development bank financing have been a staple of recent administrations that have yet to materialize, and this time the commitment faces the added complication that several banks are currently facing non-performing loan issues. We will have to wait for more details on the rest of the Plan’s instruments, and the new decrees, laws and rules that will accompany them, in order to determine their impact and effectiveness. In this week’s Outlook we provide a classification of the Plan’s 2030 targets by degree of feasibility and offer an initial assessment of the Plan and its medium-and-long-term implications.
In economic indicators released last week, private consumption grew by one half a percentage point in October 2024, a third consecutive month of deceleration. Growth remained concentrated in imported goods but demand in this category has slowed considerably from the almost 20% pace of 2023 and the first half of 2024. The pace of services consumption has fallen to less than half its 2023 average. Moreover, October delivered a second consecutive drop in gross fixed investment in response to the ongoing weakening of construction investment.
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