NO ONE CAN accuse Andrés Manuel López Obrador of panicking. As covid-19 sickened people and ravaged economies across the globe, Mexico’s president snapped selfies with supporters. Now that the cost to Mexico’s economy is becoming clear, he is sticking with the idiosyncratic mix of populism and austerity that has guided policy since he became president in December 2018. His stubbornness may worsen what could be Mexico’s deepest recession in almost a century. That could wreck the popularity of a leader whose approval ratings have been among the world’s highest and end his dream of a pro-poor “fourth transformation” of Mexico.
The country’s economy, which shrank by 0.1% last year, is among the most vulnerable in Latin America. It depends on trade with and remittances from the United States, tourism and exports of oil, all of which are being battered by covid-19. In the four weeks to April 6th Mexico lost 347,000 formal jobs, more than the total created in 2019. The IMF expects GDP to contract by 6.6% this year. In Latin America only Venezuela’s economy will shrink more.
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