La Semana: Sunday, Feb 6
The week in economic debates, protests and the recall referendum
Welcome to the Sunday edition of The Mexpatriate. In today’s newsletter:
Normalistas and National Guard clash in Guerrero
The Question Remains: update on the presidential recall
Please send me your comments, feedback and questions, and feel free to forward this to anyone who may be interested. You can always find all sources (with links) at the bottom of the email.
On January 31, the Mexican government agency INEGI (National Institute of Statistics and Geography) released preliminary data summarizing the country’s economic performance in 2021: GDP growth for the year came in at 5.1% (coming off an 8.4% decline in 2020), but showed a contraction in the last two quarters of 2021. This puts the economy in a “technical” recession.
What is worrisome for the Mexican economy in particular is the dreaded economic ailment known as “stagflation”: rising prices accompanied by stagnant economic growth.
Some have been quick to point out that it is premature to talk of recession:
“If there are two quarters in a row with negative GDP, it increases the possibility that there is a recession, but that is not enough by itself. A recession has to comply with three requirements: depth, duration, and spread. For now, we comply only with duration,” stated Jonathan Heath, a deputy governor of Banxico (Mexico’s central bank). INEGI will release finalized numbers on February 25.
While pundits and economists debate the diagnosis of recession, most citizens have experienced the symptoms of economic downturn most acutely through inflation, which measured 7.36% in 2021 (the highest level recorded since 2000).
“There used to be a big cazuela of limes and each customer could take as many as they liked. Now they’re only giving out a quarter of lime per taco,” lamented a Mexico City taco-eater in a Jan 18 article in El País México about the price of Mexico’s most widely used citrus fruit, which spiked 153% in the last year.
Lime rationing is an extreme example of inflation affecting the price of many goods and services, and inspiring an outburst of memes.
The squeeze of global supply chain disruption, rising transportation costs and in the case of limes, security and climate issues, have all contributed to higher prices.
Inflation is clearly not a uniquely Mexican phenomenon in today’s global economy. Many other countries are experiencing record levels of inflation as they recover from the crisis of 2020, including the United States, which had an inflation rate of 6.8% in 2021 (the highest since 1982). Financial experts have predicted that inflation will come down in 2022 as supply chains begin to recover. According to Carlos Serrano, chief economist at BBVA Mexico, in a December 2021 interview:
“This is not like the inflation of Mexico’s past in which governments made fiscal mistakes, with a central bank that was not independent and was told to print more money to finance the excessive spending. I think that inflation will come down all over the world, as well as in Mexico. These supply chain bottlenecks will start to open up.” As of January 27, BBVA predicted inflation to average 4.1% in Mexico in 2022.
What is worrisome for the Mexican economy in particular is the dreaded economic ailment known as “stagflation”: rising prices accompanied by stagnant economic growth. In contrast to other Latin American countries, and the United States, which have injected capital into their economies in reaction to the pressures of the pandemic, Mexico’s government chose to adhere to austerity. In Chile, GDP grew as much as 10.8% in 2021, but the government enacted the largest fiscal stimulus package in its history ($11.8 billion USD). While Chile is also feeling the effects of inflation (7.2% in 2021), it’s less painful when accompanied by growth.
Economic stagnation is often accompanied by high levels of unemployment, which led President López Obrador (AMLO) to defend his optimistic assessment of Mexico’s economy on February 2, celebrating the “most job creation” in twenty years, shrugging off talk of recession (“what recession?”) and predicting 5% GDP growth for Mexico in 2022…and in 2023 and 2024.
It is true that official unemployment rates in Mexico are usually low, but that is simply because “people do not have the luxury of being unemployed,” as explained by economist Valeria Moy in a January 21 opinion piece. “We have a dual labor market: the formal one, officially registered with social security and benefits, and the informal one, with zero benefits.” INEGI reported that 56.5% of people employed in Mexico are in the informal sector as of December 2021, a 0.8% increase from 2020.
“A government like ours has to think about growth, but also welfare, because when people talk about growth it means accumulation of wealth, but not necessarily the distribution of wealth,” explained AMLO.
But has inequality improved during his term?
From 2018 to 2020, the number of Mexicans living in poverty increased by 3.8 million. According to the 2022 World Inequality Report, 10% of the Mexican population holds 79% of its wealth making it “one of the most unequal countries in the world.”
Normalistas and National Guard clash in Guerrero
“¡Vivos se los llevaron, vivos los queremos!”
“They were taken alive, we want them back alive,” hundreds of voices scream.
I have to stop and catch my breath, my chest tightens. I am on a run while listening to a newly released podcast series, “After Ayotzinapa.” Hearing those cries reminds me of that period, when the entire country seemed to be suffering the same desperate pain as the families of “los 43”, the forty-three students from Ayotzinapa who disappeared after a confrontation with police on September 26, 2014 in Iguala, Guerrero. Partial remains of a few of the young men have been identified since, but many of the events of that night—and the people behind them—remain a mystery.
The outcry surrounding the disappearance of the students speaks to a much broader national tragedy. As of the end of 2021, there are 95,794 missing people in Mexico according to official statistics. This unimaginable number is so hard to grasp, it risks numbing our capacity to react. But 43 young men: you can visualize 43 people in a room, 43 people in a town square, 43 people being forced into pickup trucks and vanishing into the night.
This past Friday, February 4, violence erupted between a group of normalistas, students from the rural teaching college of Ayotzinapa, and the Guardia Nacional (National Guard) at a toll plaza in Palo Blanco, Guerrero, on the Autopista del Sol (Highway of the Sun) between Cuernavaca and Acapulco. The normalistas were attempting to take over the toll plaza, which they do frequently in the area, collecting the toll money from motorists and handing out flyers. Protests of all sizes and causes have long been a feature of Mexican roadways, along with the fruit stands, fire-eaters, and strays. In December 2021, a reform was approved in the Senate to penalize with up to seven years in prison those who blockade toll plazas or partially or completely obstruct transit on roadways. According to the government, public agencies and private licensees lost 4 billion pesos because of toll hijacking throughout Mexico in 2020.
“The truth is, this takeover of toll plazas is no longer just an act of social protest, it has been exploited by organized crime to make money,” said Jorge Arganis Díaz Leal, the Secretary of the Department of Transport and Communications in a speech to Congress in October 2021.
In the February 4 confrontation, 500 members of the National Guard and state police in riot gear used tear gas against the normalistas, who threw rocks and then launched a hijacked driver-less Soriana semi-trailer at the rows of law enforcement. Security forces reported a total of 22 injuries to their own, the student group has claimed 20 of their members were hurt, three of whom are hospitalized. Both sides claim the other initiated the aggression. The students have declared that they will stop taking over the tolls on the Autopista del Sol when the government hands over the 43 students who disappeared in Iguala over seven years ago.
Micaela Cabañas, director of the Guerrero office of the National Human Rights Commission (CNDH) was quoted in La Jornada: “they don’t apply this same government force to combat criminal activity: in Guerrero, and in the country of Mexico, there are enough armed forces to put an end to the insecurity, but they aren’t doing their job.”
The struggle to keep the Ayotzinapa case in the national spotlight has not been in vain. On Feburary 1, the Mexican government finally submitted their official request for the extradition of Tomás Zerón, former lead investigator from the attorney general’s office (FGR) during the Peña Nieto administration (whose term was from 2012-18). Zerón fled to Israel in August 2019. He is wanted for crimes committed during his investigation of the missing students, including torture, manipulation of evidence, obstruction of justice and fraud.
The new lead prosecutor in charge of the case is Omar Gómez Trejo, a human rights lawyer whose initial involvement began as assistant to the International Interdisciplinary Group of Independent Experts (GIEI) who were brought in to work on the case in March 2015. The report released by the group in September 2015 called into question many elements of the “historical truth” that had been presented by the authorities and embarrassed the government. Gómez Trejo had to flee Mexico, only returning in early 2019, feeling emboldened after Andrés Manuel López Obrador (AMLO) became president.
In the podcast, one of the mothers of the students, Cristina Bautista, explains her experience with AMLO at a rally:
“AMLO was on the stage, totally blocked off and security would not let us through. Then he saw us and he told security, ‘Let them through.’ And I remember I spoke, ‘If you become president, what are you going to do for our case?’ I think the question touched his heart. He teared up and said, ‘If I become president, we will find out what happened that night.’”
Cristina still awaits answers, as do so many mothers, fathers, sisters, brothers, husbands and wives across Mexico.
The Question Remains: update on the presidential recall referendum
The latest on the April 10 referendum vote is good news for President López Obrador: Mexico’s Supreme Court (SCJN) has ruled that the phrasing of the question listed on the ballot for the referendum cannot be modified.
“Do you agree that Andrés Manuel López Obrador, President of the United Mexican States, should be removed from power because of a loss of confidence, or should he remain as President of the Republic until the end of his term?”
“That he be removed from power because of loss of confidence.”
“That he remain President of the Republic.”
Opponents had criticized the wording on the ballot, alleging that it should instead be a simple “Yes” or “No” answer to the question: “Should the president be removed from power?”
One of the dissenting members of the court (Alberto Pérez Dayán) stated: “On this occasion, the presidential recall referendum is actually a process of ratification.”
More updates to come…
Datos sin edulcorar (El Universal)
México despidió 2021 con la inflación más alta en 21 años (Animal Político)
Chile targets large deficit cut (Fitch Ratings)
¿Estamos en estanflación? Probablemente sí (Opinión 51)
Inflación: el precio del limón aumenta 153% en México en un año (El País México)
Crimen organizado, detrás de la toma de casetas, asegura SCT (El Economista)
México pide formalmente a Israel la entrega de Tomás Zerón (El País México)