In Mexico no one trusts the economy

Executive directors of the 500 largest Mexican companies consider that Mexico is living a very bad moment for business. That is the main conclusion of the survey “Economic and social environment of the country”, conducted by financial magazine Expansion. Those 500 CEO are less confident today than in the previous quarter, their optimism is barely zero and they only foresee a slightly brighter future in the next 12 months.

A blurry new economic framework due to the ongoing reforms, as well as the usual suspect, that is, corruption, are the key points explaining the Mexican market makers’ huge lack of trust. In a table in which 100 points means that the situation is getting much better and 0 means getting much worst, the 500 major CEOs average is of 38.4 points when asked about the overall economic situation. As for the economic impact of corruption, the number falls to 29.2 points. That means they consider the current panorama “worst” than in previous years, which is no small thing.

According to the conservative U.S. think tank Heritage Foundation and The Wall Street Journal, the high corruption levels at all stages made Mexico lose six places in their Economic Freedom ranking. Now the country holds the 55^th place out of 178 evaluated countries.

If having 500 major CEO uneasy about the economy was not enough, Mexico sees how citizens are turning their backs on the economy as well. Consumer confidence fell in December, according to the National Institute of Statistics and Geography (INEGI). Mexicans feel pessimistic and consider the economic situation in the country will continue unstable throughout the year. The Consumer Confidence Index fell by 9.4% in the last month of 2013 compared to the same period of 2012.

“We believe that the adoption of the tax reform led to a further drop in consumer expectations, as new tax rules imply a higher tax burden for both households and businesses starting in 2014,” Banorte-IXE analyst Alejandro Cervantes says.

These figures contrast with those of a year ago. In early 2013, Mexico had generated enthusiasm in the international markets before the arrival of the Institutional Revolutionary Party (PRI) to power and the signing of the Pact for Mexico, which opened the possibility for structural reforms to be passed. Today, those same reforms have even opened an internal debate on whether Mexico is facing an economic crisis, despite the fact that the country is expected to grow by 4% this year and even at an annual pace of 5% until  2018, according to the Ministry of Finance.