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Mexico's president not a typical populist, but local policy could hamper growth -IMF official

04/08/2021 | 03:49pm EDT

NEW YORK, April 8 (Reuters) - Mexico's economic growth could surprise to the upside as a spillover effect of massive stimulus in the United States, but local policies could hamper growth down the road, an official at the International Monetary Fund said on Thursday.

Mexican President Andres Manuel Lopez Obrador is a "different kind of politician" that people want to box in as a typical Latin American populist, Alejandro Werner, the IMF's director for the Western Hemisphere, told a virtual event hosted by S&P Global.

"I don't know how you want to qualify a populist, but at least on the macro front he has been respectful of budget constraints; on the trade side he has been very open to the Mexican economy being highly integrated to the world economy," he said.

Werner said the Mexican government is "seriously committed" to macroeconomic stability on the monetary, fiscal and financial fronts.

However, Werner said, Lopez Obrador has a view of the state as a very involved actor in the economy and it could weigh on economic growth after the positive effects of the rebound from the COVID-19 pandemic and the $1.9 trillion U.S. stimulus have waned.

Late last month, for instance, Lopez Obrador proposed a law that sets out a series of measures to strengthen state influence over the oil and gas industry.

"We're going to have high growth recovering from the COVID crisis, and on the back of the U.S. (stimulus) spillover. But after that is gone I think we will go back to a pretty mediocre (growth) and that eventually will feed into the macro stability," Werner said, adding that he didn't see the negative effects for years down the road.

The IMF this week raised its forecast for Mexico's gross domestic product growth in 2021 to 5.0% from a forecast of 4.3% in January.

"But I think it can surprise on the upside, mostly given what's going on in the U.S.," Werner said. (Reporting by Rodrigo Campos; editing by Jonathan Oatis)


© Reuters 2021
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