MEXICO CITY (Reuters) – Mexican President Andres Manuel Lopez Obrador, in his first state of the union address on Sunday, doubled down on his approach to managing Latin America’s second-largest economy, saying the interests of private firms would be subordinated to those of the nation.
Mexico’s President Andres Manuel Lopez Obrador delivers his first state of the union at National Palace in Mexico City, Mexico, September 1, 2019. REUTERS/Henry Romero
After taking office in December vowing to revive a sluggish economy and reduce violence, the veteran leftist has so far fallen short of the goals he set himself.
Lopez Obrador said last Tuesday that after a months-long dispute, he had saved taxpayers $4.5 billion by making companies renegotiate several natural gas pipeline contracts agreed to by the last government.
“The companies accepted the principle that the national interest must be above the private interest, however legitimate (those interests) may be,” Lopez Obrador said in his Sunday speech.
Supporters of Lopez Obrador hailed the accord as a political victory for the president, who has spent years accusing business leaders of colluding with corrupt politicians to get rich.
Lopez Obrador underscored on Sunday that his economic plan would look to promote private enterprise, boost foreign trade and promote the attraction of foreign investment.
It is unclear if companies will feel encouraged to bet on Mexico as a result of the agreement and his comments.
Some of the decisions made by Lopez Obrador, an exponent of economic nationalism, have shaken investor confidence in Mexico. Among them, his cancellation of a partly built $13 billion Mexico City airport rattled markets.
The central bank said on Thursday the economy was facing headwinds, including stagnating private investment, which was affected by a persistent environment of uncertainty stemming from the public policy decisions made by the government and concerns over insecurity and corruption.
In his state of the union address, Lopez Obrador also said that income distribution would remain a priority over economic growth.
The administration will “gradually push aside the technocratic obsession of measuring everything based simply on economic growth,” he said. “The equitable distribution of income and wealth” will be his government’s guiding principles.
He has argued that by redistributing wealth better, his government is able to help economic development among the poor even with lower headline growth numbers.
Mexico narrowly avoided entering a recession in the second quarter, prompting the central bank to cut its economic outlook for the year to forecast virtually no growth, citing slack conditions that will persist longer than expected.
In his first nine months in office, Lopez Obrador has repeated the message that the chronic inequality, gang violence and tepid growth afflicting Mexico are the product of decades of government by a corrupt political and economic elite still trying to resist his promise of change.
Reporting by Anthony Esposito; Editing by Peter Cooney