MEXICO CITY (Reuters) - Mexican President Andres Manuel Lopez Obrador on Tuesday criticized the use of GDP growth as a yardstick of development, but stuck to his forecast of a 2% expansion this year after the International Monetary Fund lowered its estimate.
On Tuesday, the Washington-based organization lowered its 2019 forecast for global growth, and slashed the outlook for Latin America by more than half compared with estimates from just three months ago.
The IMF said Mexico’s economy is seen growing by 0.9% this year, down from its prior forecast of 1.6% three months ago.
Apparently surprised when asked about the new IMF estimate in his morning news conference, Lopez Obrador responded: “They cut us again?” He then said the organization should apologize for its record of prescribing policies to emerging economies.
“I don’t have much confidence in these organizations... They were the ones who pushed neo-liberal economics in Mexico,” said the president.
Lopez Obrador invited economists at the IMF and other “technocrats” to a discussion about whether growth measured by gross domestic product (GDP) was the same as development. However, he said Mexico was part of the global financial system and “was not going to withdraw from these organizations.”
“They are not going to decide the agenda in Mexico, that is over,” he added.
He said Mexico was not going to measure success in fighting poverty only by how much its GDP expanded, adding that the government would also focus on salaries, wealth distribution and access to education and health services.
The IMF, set up in the 1940s with an objective to promote global financial stability, bailed out Latin American nations during debt crises in the 1980s. In return, it demanded strict budgetary austerity that critics say worsened poverty.
Preliminary data for Mexico’s second-quarter growth is due to be published on July 31, and some private economists predict a second quarter of contraction. This has sparked a debate over whether that would put Mexico into recession.
Jonathan Heath, a former HSBC chief economist appointed to the central bank board by Lopez Obrador’s government, on Tuesday said two quarters of contraction did not make a recession.
The highly respected Cambridge, Massachusetts-based U.S. National Bureau of Economic Research “does not use this rule,” said Heath.
Reporting by Frank Jack Daniel and Rebekah F Ward; Editing by Jonathan Oatis and Rosalba O'Brien