Ditch the plan

2 September 2014 By Martin Hutchinson

President Peña Nieto’s state of the nation address came with big spending plans. The economy gained just 1.6 pct over last year almost entirely thanks to a wider budget deficit. Producing the wealthier Mexico he wants will take more than building new bridges and tunnels.

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President Enrique Peña Nieto delivered his State of the Nation address on Sept. 2. He proposed a bill to limit child labor, touted his reforms in telecoms, education, energy and finance as well as his tax increases, and claimed the growth uptick in the second quarter proved his policies are working. He also raised his target for infrastructure spending to 7.7 trillion pesos ($587 billion) by 2018, almost double his 4 trillion peso target of last year, of which 4.8 trillion pesos would come from the public sector.

Mexico’s real GDP rose by 1.6 percent between the second quarter of 2013 and the second quarter of 2014, according to the Institute of National Statistics, from an annualized 13.37 trillion to 13.58 trillion 2008 pesos (16.83 trillion current pesos, or $1.29 trillion).

Mexico’s public sector deficit rose from 357 billion pesos in the year to June 2013 to 542 billion pesos in the year to June 2014, according to Bank of Mexico figures. Public sector revenue rose by 8.4 percent and public sector expenditure rose by 12.3 percent.

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