Former Finance Secretary Guillermo Ortiz Says Government Economic Indicators Are Real but Their Interpretation Does Not Fully Reflect Mexico’s Economy
Former Secretary of Finance and Public Credit and former Governor of the Bank of Mexico, Guillermo Ortiz, stated that the economic indicators presented by the government of Claudia Sheinbaum are essentially correct, but argued that their interpretation offers a picture that does not comprehensively reflect the situation of the Mexican economy.
During an interview on Aristegui en Vivo, the former official analyzed the data released by the Presidency in response to the evaluations of the rating agencies Moody’s and Standard & Poor’s and explained the arguments he had previously developed in a text titled “The Economic Manipulation of the Mexican Government.”
“The points raised by President Sheinbaum are essentially correct in the sense that they are real figures, but they are figures that are interpreted in a way that does not correspond to reality,” he said.
Foreign Direct Investment
One of the indicators reviewed was Mexico’s position among the world’s top 10 destinations for foreign direct investment (FDI). Ortiz acknowledged the validity of the figure but warned that most of the recorded resources correspond to companies already operating in the country rather than new investments.
“It is true that Mexico is among the top 10, but the vast majority of foreign investment consists of companies already established in Mexico that reinvest their profits. It is not new investment, and it is not as if there were a line of investors waiting to enter,” he stated.
According to Ortiz, more than 75% of FDI consists of reinvested earnings. Explaining why he believes Mexico is not attracting a greater volume of new investment, he pointed to the rule of law and institutional changes in recent years.
“For some time now there has been a dismantling of the rule of law. There has been an erosion of the rules and regulations governing the behavior of regulators and the government. Autonomous institutions have been dismantled, and the recent judicial election resulted in a significant increase in government influence over the judiciary,” he said.
Ortiz argued that this situation centralizes power and creates uncertainty among investors. He added that Mexico maintains strengths due to its trade relationship with the United States, although uncertainty surrounding the USMCA also remains.
“In my view, the most important cause is the systematic erosion of the rule of law, which is an essential requirement for investment,” he stated.
Wage Increases and Productivity
Regarding wage increases, Ortiz considered the decision to raise the minimum wage under both the previous and current administrations to be appropriate because it had lagged behind for many years. However, he warned that wage increases must be accompanied by productivity growth in order to remain sustainable.
“I believe it was a good decision by the previous government and this government to increase the minimum wage, which had been significantly lagging,” he said.
The former Governor of the Bank of Mexico noted that productivity has remained stagnant for at least a decade and argued that without greater output per worker or per hour worked, companies must finance wage increases through their profits.
“If workers are not producing more, how do you pay them? From profits. And if profits are not enough, businesses close. This especially affects small and medium-sized enterprises,” he said.
He linked this issue to the country’s weak economic growth in recent years, explaining that the past seven years represent the slowest growth period since the economic crisis of the 1980s.
“If there is no increase in productivity—that is, output per hour or per worker—the country simply stagnates, and that is what is happening. Of course it is good that wages increase. The question is whether this is sustainable,” he said.
Low Unemployment Rate and High Informality
Ortiz also addressed the government’s claim that Mexico has the second-lowest unemployment rate among OECD countries, behind only Japan.
He explained that this indicator must be analyzed in the context that approximately half of Mexico’s labor force works in the informal economy and that anyone performing some economic activity is counted as employed, even if they lack formal employment.
“The first point is that around 50% of Mexico’s labor force is employed in informal activities,” he explained.
He added that Mexico does not have unemployment insurance and rejected direct comparisons with Japan because of the differences between their labor markets.
“Japan obviously has a very low unemployment rate, but 99% of its population has formal employment, whereas in Mexico it is less than 50%. You cannot compare apples to oranges.”
Regarding the 22.7 million formal jobs registered in June 2026, he said that the increase in the absolute number of jobs had not substantially changed the proportion of workers employed informally.
Referring to wages, Ortiz reiterated that salary increases require productivity gains to remain sustainable.
“Any wage increase that is not based on real productivity gains is, by definition, unsustainable,” he said.
Trade with the United States and the Gap Between Northern and Southern Mexico
Ortiz acknowledged the high level of trade between Mexico and the United States as a positive indicator and attributed much of that performance to the trade agreement and the development of an export sector concentrated mainly in central and northern Mexico.
He highlighted exports of automobiles, medical equipment, and computer products as sectors in which Mexico has made significant progress. However, he said the benefits are not distributed equally across all regions.
“In that sense, Mexico has made great progress. However, in the rest of the country, especially in the south, that is not happening,” he said.
In his opinion, “the gap between northern and southern Mexico is widening rather than narrowing,” meaning that export growth does not necessarily translate into greater well-being for the population as a whole.
He also recognized as positive the fact that Mexico has become the largest supplier to the United States.
“No one can ignore the progress Mexico has made in exports and how it has become the largest supplier to the United States,” he said.
However, he argued that the export sector employs only a relatively small proportion of the population compared to those living in regions that do not directly benefit from export activity.
He also maintained that the multiplier effect of exports on the broader economy is limited because many exported products contain imported components.
“A large share of Mexico’s exports depends on imported inputs incorporated into the production process. In most sectors, except for a few, the domestic value added of Mexican exports is relatively small,” he explained.
He clarified that the country’s modern economy—including the automotive, auto parts, aerospace, computer, and semiconductor industries—is a positive reality for Mexico, although he argued that its benefits do not extend proportionally to small and medium-sized enterprises or to most of the population.
Economic Growth Below 1% and Stagnant Per Capita Income
When evaluating the overall performance of the economy, Ortiz insisted that economic growth is one of the main indicators for assessing the country’s situation. He added that per capita income remains “virtually stagnant.”
Regarding private consumption, he questioned the use of growth recorded during a specific period as evidence of the overall performance of the economy. Ortiz agreed that the indicator should be evaluated using a broader historical series rather than focusing on a single favorable month or quarter.
He made the same observation regarding overall economic activity. Ortiz stated that throughout Andrés Manuel López Obrador’s administration and during the first year of Claudia Sheinbaum’s government, average economic growth remained below 1%.
“If the population is growing at roughly the same pace, then per capita income is stagnant,” he explained.
Regarding industrial activity, Ortiz said the government emphasized growth recorded in April, but argued that reviewing previous months and quarters presents a different picture.
“They chose the month of April because it showed growth, but if you look at previous monthly or quarterly data, average industrial growth was much lower,” he said.
He described this as “a very selective choice of specific data that creates a certain picture, but when analyzed more thoroughly, it does not correspond to reality.”
Ortiz also acknowledged the favorable performance of inflation, noting that it is close to the Bank of Mexico’s target, although he pointed out that core inflation remains above 3% and close to 4%.
Despite this, he argued that the overall assessment should take into account economic stagnation and weak private and public investment.
“The reality is that the economy is stagnant, there is no private investment, and there is no money for public investment. Private investment is also stagnant,” he said.
Rule of Law, Extortion, and Investment
The former official stated that business confidence indicators also show reluctance to make new investments in Mexico and linked this behavior to the rule of law and legal certainty.
He added organized crime and extortion against economic activities in various regions of the country as additional factors.
“So we return to the issue of the rule of law, legal certainty, and the enormous problem that organized crime and extortion represent for economic activity in much of the country,” he said.
The former Governor of the Bank of Mexico described this phenomenon as one of the country’s most significant economic issues because of the additional costs imposed on businesses and workers forced to make payments to criminal groups.
“When the government collects taxes, but local criminal groups also charge protection money for selling your products—whether you own a restaurant or sell agricultural products on the street—it obviously has a tremendously harmful effect on economic activity,” he said.
Ortiz clarified that his comments referred only to the economic impact of criminal activity and did not address its human consequences, including disappearances and homicides.
He also discussed public debt, noting that according to official figures it represents around 51% of gross domestic product (GDP).
“As a proportion of GDP, according to official figures, public debt is around 51%, which compares reasonably well with other countries, especially after the pandemic, when debt increased significantly,” he explained.
However, he argued that the main issue is the sustainability of public finances because government revenues are not growing at the same pace as already committed expenditures.
“Government revenues are not increasing at the same rate as committed expenditures. For example, subsidies and transfer programs have increased very significantly,” he said.
Ortiz specifically mentioned programs for older adults, which he considered desirable, although he questioned the fact that benefits are provided universally, including to people who already receive pensions.
The former Finance Secretary argued that the growth of these commitments should be analyzed alongside the evolution of government revenues in order to determine their long-term sustainability.
“These are important issues because the question is how sustainable all of this is. How sustainable are public finances if revenues do not grow while already committed expenditures increase systematically and substantially year after year?” he said.
He concluded that spending on pensions for older adults is also linked to the country’s demographic transition and the growing elderly population, a factor that he said will become increasingly important for Mexico’s public finances.
Soource: aristeguinoticias
