The Mexican government, asserting again that real economic recovery is just around the corner, has gone on the offensive in the face of continuing attacks on its 14-month-old austerity program.
Top opposition politicians, church leaders and even members of the ruling Institutional Revolutionary Party have joined a growing chorus demanding that the government reverse recent moves to free markets, and start pouring federal money into the economy.
But President Ernesto Zedillo Ponce de Leon vowed last week not to cave.
“Some people saw in the crisis the opportunity to try to go back to a past already overcome,” Zedillo told the annual convention of the Mexican stock market. “But the Mexican people are not the type to give in.”
Zedillo’s message included a warning of more sacrifice ahead. But he asserted that staying the course would prove less painful in the long run and that the low point of the crisis has passed.
Critics derided the Zedillo speech as more empty talk. The government for months has been trumpeting improving macroeconomic numbers and promising prematurely that recovery in the real economy–where people work, eat and play–would soon follow.
But this time, Zedillo backed up his words with statistics showing employment turning around and inflation easing. He also predicted that the economy would grow 5 percent in the current quarter.
Given that Mexico’s gross domestic product plunged more than 10 percent in the year-earlier quarter, even small growth this year should produce solid numbers, as Zedillo’s supporters acknowledge. But that doesn’t detract, they say, from the real, if slow, progress Mexico is making.
“I don’t think they can be criticized on this,” said Raul Munoz, president and general director of Du Pont Co. in Mexico. “You have to listen to what they are saying: that inflation is down in comparison with last year, that the peso has stabilized. First things first.”
Munoz said Du Pont’s business remains slow. But the uncertainty of the last 15 months has pretty much passed, he said.
The peso, which yo-yo’d after being devalued in December 1994 and eventually surpassed 8 pesos to the dollar at its weakest point, has settled into a groove. It closed Friday at 7.41 and has remained around 7.50 to the dollar all year despite many projections of a continued slide.