The sin
The death of micro-businesses is a sin because it is a disdain for the economic base of the country. Towards the voters who are in the middle, that is, between the strong and loyal base of voters in the government and those of the recalcitrant right.
Furthermore, it should be noted that the Mexican State has never been pro-SME. Other governments have tried to help SMEs with little success and with little-use programs such as the defunct institute of the entrepreneur. SMEs do not need a government to teach them business classes, they need to be given freedoms, particularly fiscal freedoms that do not suffocate them with the shackle of ISR.
They say that penance is in sin, but I don’t see it coming, until the next six-year term.
However, two circumstances are observed for the second half of this six-year term. First, the Mexican economy is going to grow towards the end of the six-year term. And, second, that growth is going to be discounted by an extraordinary inflationary factor.
The economy will grow thanks to the continuity of the monetary policy of the United States, where the Federal Reserve will extend what many of us saw coming years ago, negative real interest rates, even if they reduce the intensity of the injection of money in that country.
Economic policy
Finally, in the hierarchy of economic relations, the airport, the infrastructure projects of this government and even the refinery, are outliers They do not undermine the power of money. In other words, whether they do it or not, this does not change the growth potential of the Mexican economy.
Instead, what modifies the medium and long-term growth prospects is the level of government participation in the oil and electricity industries. To put it easier, the potential growth of the economy would be slightly higher with more private intervention in these industries. This is most evident in the oil industry. The fact of having limited private investment in this area puts pressure not only on the country’s growth prospects, but also limits the spending capacity of the federal government.
Finally, it seems to me that the most difficult of this six-year period in economic matters is over.
That is if some major event does not appear that plunges the economy into a new pothole. But you can’t see it coming. Possibly the most serious thing would be some reduction of the sovereign note, which perhaps is already being discounted.
The biggest economic problem in the second half of the six-year term will be within Banxico, that immaculate institution, which today is watering. Every day he biases his decisions more towards the protection of the six-year political cycle, without caring so much about inflation. He does a double mandate, when in fact he has one, and he does it badly. But this is not new, since Banxico has a 14% specific effectiveness in its objective since 2008.
The next central bank governor you will have to implement (even if you don’t want to) a monetary policy that will undoubtedly move to restrictive territory in 2022 and 2023. Yes, the bitter medicine against inflation will return, due to a matter of cycle and to lessen the monetary festival of the preceding years.
Editor’s note: Iván Franco is the founder and director of the competitive intelligence consultancy Triplethree International. Follow him on Twitter and in LinkedIn . The opinions expressed in this column belong exclusively to the author.
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