Advertisement

You will be redirected to the page you want to view in  seconds.

Mexican President Enrique Pena Nieto delivers a speech Feb. 11 in Mexico City. / Ronaldo Schemidt, AFP/Getty Images

MEXICO CITY ?? When President Obama arrives in Mexico on Wednesday he will find a nation touted by some economists and political figures as on the verge of a great leap forward.

Ordinary Mexicans seem to disagree, though.

This month Moody's raised Mexico's bond rating a full notch, confirming the confidence of investors in the structural reforms that the Mexico government says will grow an economy long lagging behind other Latin American nations.

But on that same day, Mexico's national statistics service released a survey showing that consumer confidence has crashed to its lowest level since the depths of the world economic crisis in 2009.

The pessimism is rooted in worries over rising prices, new taxes and stagnant wages, and respondents were skeptical that the "structural reforms" would help them, according to the survey.

Outside observers and international investors often exhibit more optimism for Mexico and its economy than Mexicans themselves. That's because ordinary Mexicans remember the many past overhauls and privatizations that promised to turn Mexico into an advanced nation but instead created monopolies and underwhelming economic growth, say analysts.

"People inside the country have a sense of history that's a little different" than international investors, says Jonathan Heath, an independent economist in Mexico City.

"They know that on many occasions, when the whole world has been positive about Mexico, we've fallen into crisis," adds Heath, recalling the peso crash of 1994, when Mexicans suspected something was economically amiss and bought U.S. dollars as international investors kept investing in Mexico.

Obama, who arrives here Wednesday for a meeting of North American leaders, is among those expressing optimism. Vice President Biden expressed similar sentiments during a September visit to Mexico City when he told his hosts, "We wish you well in those reforms. Because, as an outsider looking in, they're all needed."

Mexico President Enrique Peña Nieto has made changes his top priority since taking office 14 months ago. He has reached across party lines to broker deals with a weak opposition in Congress, including a measure in December that approved an end to a seven-decade-long state oil monopoly.

"Reforms elevate the expectations of (GDP) growth of the national economy over the medium- and long-term, a factor that distinguishes us from other emerging nations," Peña Nieto told an audience of bankers last week.

The feedback has been fawning for Peña, 47, whose Institutional Revolutionary Party took office after spending a dozen years in opposition, when it ironically opposed the very reforms that the president now champions as his own.

Many of the kudos are coming not from inside Mexico but from abroad

Peña Nieto was treated like a star at the World Economic Forum last month in Switzerland. Finance Minister Luis Videgaray was named best in the world at his job by The Banker magazine.

But in Mexico, just 32% approve of Peña Nieto's performance, the lowest level in four presidential administrations, according to a February survey by polling firm BGC.

Mexico's economy expanded only 1.3% in 2013, less than half of the 3.5% anticipated by the federal government. It did not stop the accolades.

"Peña Nieto's public relations entourage puts Madison Avenue to shame," says George Grayson, Mexico expert at the College of William & Mary in Virginia.

Time magazine summed up the sunny sentiments by putting Peña Nieto on the cover of its international editions with the headline, "Saving Mexico." It also noted how he had changed the narrative to economic issues and structural reforms instead of drug cartel killings.

Yet that may be only because he has always talked little about the drug cartels that have swamped Mexico despite recent headlines on the emergence of self-defense groups of citizens who are arming themselves to fight gangs in several states where police provide little protection.

"It would have been better to put, 'Sinking Mexico,'" on the Time cover, says Lourdes Valencia, a laundromat employee upset with rising prices and lack of security in the eastern suburbs of Mexico City.

Some past reforms have worked, such as those that opened up the political system and allowed an opposition party to claim power in 2000 from the Institutional Revolutionary Party (PRI) that had held it for more than 70 years.

Another change in the law granted independence to the central bank, which Heath credits with reining in runaway inflation.

But some reforms didn't deliver, and Mexicans have not forgotten.

Past privatizations resulted in people paying high prices for bank and telecom services, to name two industries that boast big profits but are the targets of numerous complaints over service. Billionaire Carlos Slim bought telephone monopoly Telemex in 1990 and became the world's richest man within two decades.

Mexicans "have gone through a series of reforms that have on balance have been positive, but that haven't necessarily impacted clearly in favor of consumers or citizens, in a way that they would remember and hold top of mind," says Federico Estévez, political science professor at the Autonomous Technological Institute of Mexico.

"We're wary about just how profound the benefits, or how deep the benefits from the structural change will be," he says.

Peña Nieto's reforms have been promoted as "audacious," such as the opening of the state-run oil industry, whose 1938 takeover by the government is celebrated as a seminal moment in the making of the modern Mexico.

An education reform will require teachers be examined for performance, and it outlaws practices such as allowing teachers to sell their jobs like personal property.

An overhaul of the telecommunications sector allows for tougher rules to be applied to dominant TV and telecom players that previously ran roughshod over regulators and charged high prices. Secondary laws still must be approved for all the reforms to be effective.

A reform of the political system also was approved, ending the limit of one term per officeholder. The PRI previously considered re-election to be heresy, preferring to seat new supporters every term to satisfy its many backers.

"These are changes that really have tremendous potential and should rightfully be hailed as important," says Deborah Riner, chief economist for the American Chamber of Commerce in Mexico City.

"With energy reform, you're creating a real possibility that Mexico's sustainable growth rate can jump up to 5%," which would double the average of the past 25 years.

Others are less enthusiastic.

One reason for that is a measure approved in October that was meant to raise government revenue and lessen dependence on income from oil sales. It instead increased taxes - mostly on people already paying.The nearly 60% of people working in the "informal economy" under the table were not touched directly.

"Those outside the country see it as, 'Now that reforms have been passed, Mexico is going to magically grow,' while the people inside (the country) are much more skeptical," Heath says.




Copyright 2014 USATODAY.com

Read the original story: Everyone is optimistic about Mexico, except for Mexicans

More In

test

Real Deals

Flip, shop and save on specials from your favorite retailers in central Ohio.

GET DEALS | COUPONS

Things To Do

THU
21
FRI
22
SAT
23
SUN
24
MON
25
TUE
26
WED
27

CLASSIFIEDS

Classifieds from across Central Ohio
Lancaster
Chillicothe
Newark
Marion
Bucyrus
Mansfield
Zanesville
Coshocton

Weeklies & Shoppers

10TV Headlines

Dispatch Headlines

METROMIX