Difficult for Mexico Economy to Achieve 5% Growth Rate Without Modernizing Judiciary

Luis Foncerrada, Director, Center for Economic Studies of the Private Sector (CEESP).
Photo: Jesús Quintanar

Milenio: Antonio Hernández 

Translated by Patricia Mitchell

Even with approval of energy and fiscal reforms, if the judiciary is not modernized, achieving 5% growth will not be possible, affirmed the Center for Economic Studies of the Private Sector (CEESP).

In an interview with Milenio, the director of the organization, Luis Foncerrada, highlighted that until today, the judicial reform has failed, and one hopes that the current administration will propel it forward again.

 “The corruption of the judges is terrible. The archaic processes we have are the most regressive for society, and those who are most affected are those with fewer resources, besides the fact that it is terribly unjust. Here the law is not fair except for those who pay the most. As long as we do not resolve this, judicial reform is a failed reform,” he maintained.

“In this way, we are not going to grow at 5%, the country’s potential rate. The judiciary is becoming a great obstacle for growth. Even with approval of the reforms, if Mexico as a whole is not modernized, it is like leaving a rock in the road,” he pointed out.

MV Note: Mexico's judicial system has been an inquisitorial one, in which judges review in private documents of evidence and arguments presented by prosecutors and defense lawyers. Based on this, they then rule on the guilt or innocence of the accused. The reform, passed in 2008, mandates that by 2016 in federal and states courts, there are public trials in which prosecutors and defense lawyers present evidence and make oral arguments before the judges, who still decide guilt or innocence. See: Mexico's Criminal Justice Reform in Few Words 

At the same time, Foncerrada highlighted that the lack of certainty in judicial matters inhibits investments, which limits job creation and the fight against poverty.

“The growth in productivity that people are seeking in this country needs to be reflected in real salaries. Since 1976, when the minimum wage had its greatest purchasing power, to 2000, there was a loss of 76%. Those who could buy four tortillas in 1976, now 24 years later, can only buy one. With this, the internal market was destroyed,” he indicated.

He explained that from 2000 to today, only 5% of the purchasing power of the population has been recuperated, so it is necessary to increase employment, and that requires more investment, which will not come in the absence of legal certainty.

According to Moody’s rating, the estimated growth of 3.1%, provided by the government's calculations and the majority of analysts, is congruent with the economy's current potential, in anticipation of approval of energy and fiscal reforms.

“To be growing at around 3% is congruent with the potential of the Mexican economy up until now. Most likely, the reforms that have been obtained are suggesting some stage of stable and sustainable growth, but this remains to be seen,” said Alberto Jones, director of Moody’s Mexico.

In an interview, the director pointed out that the situation of the Mexican economy, the slow implementation of [government] expenditures, such as the lower increase [in expenditures] of barely 8%, according to first quarter data, are totally normal with a change in administration.

Observing the sustained manner in which the economy advances at rates of 4% annually, one can affirm that the internal economy of the country is contributing to GDP, so that it depends to a lesser extent on the international context.

Moody’s explained that there is a deceleration scenario that affects all emerging economies in the world, but in Mexico the challenges are less than those that Brazil is facing. Spanish original