AMLO's economy is dividing the Mexican business elite

The signs of cooling in the economy, that are mainly indicated by the retraction in the first quarter, are placing a concrete question in the heads of the Business Coordinating Council (CCE): until when will Carlos Salazar Lomelín be able to avoid questioning in public the direction of Andres Manuel Lopez Obrador's government?

The conciliatory tone and the praising words from the former FEMSA CEO and president of the Council towards this government are creating divisions in the business establishment in Mexico. In these previous days, the most notorious one came from the new president of the Mexican Council of Businessmen, Antonio Del Valle, who in a recent encounter with them showed himself highly critical with Salazar's strategy.

The Mexican Council of Businessmen is the elite organization of Mexican entrepreneurs. Since its foundation, in 1962, it has been determinant in the political direction the country takes. It is formed by tycoons like Carlos Slim (CARSO), Claudio X. González (Kimberly Clark), Emilio Azcarraga Jean (Televisa), Armando Garza (Grupo Alfa), and Daniel Servitje Montull (Bimbo), among others.

Del Valle recently criticized the lack of an industrial policy, which, according to him, so far has not shown up among the priorities in Lopez Obrador's government. "In Mexico, we receive millions of dollars in speculative capital, but zero from productive investment", he said. The tycoon believes this is because MORENA does not have a speech based on reforms, in order to attract risk capital.

These reactions explain a phenomenon that is extended among the great national capitals: in this moment nobody wants to criticize the government, but nobody wants to make new investments either. A tacit equilibrium, highly adverse for the country, which has no apparent end in sight.

The economy during the first months of this administration has received a tough setback. Whereas the President promised an annual growth of 4%, during the first quarter of 2019, the economy contracted 0.2% compared to the same period in 2018. The fall was particularly harsh in the industrial sector, contracting 0.6%, and in the service sector, 0.2%. The agricultural sector was the one that rescued the GDP, with a 2.6% growth, compared to the previous year.

The Secretariat of Finance and Public Credit reduced the growth for 2019, in their last projection in April, from between 1.5% and 2.5% to 1.1% and 2.1%. Lopez Obrador rejected these figures. However, during that same month, the IMF also reduced the growth to 1.6% for this year and the Central Bank of Mexico, in its expectations reveal for April, placed it even lower, from 1.6% to 1.5%.

Whichever the case, criticism from the head of the Council of Businessmen do not seem free of political preferences. Del Valle was one of the businessmen who supported Ricardo Anaya's candidature the most, to a point in which this generated friction with Enrique Peña Nieto's government.

In a recent interview with the Financial Times, Del Valle said that he did not see "clarity" in the government's structural projects, such as the Dos Bocas refinery or the Mayan Train.

The businessman's questionings find echo at the Business Coordinating Council, where Salazar's political ambitions are a cause of discomfort, as he has shown interest in running for governor of Nuevo Leon in 2021. This encourages the theory that, since he is looking to be MORENA's candidate in the northern state, he will avoid questioning the economic direction drawn by the National Palace.