MEXICO CITY, Sept. 18 (Xinhua) -- The plan of the future government of Mexico to cut red tape and reduce salaries, including that of the president, could have an immediate impact on employment and consumer spending, the consulting firm Moody's Analytics said Tuesday.
In its report, "Mexico, under the cycle of political transition," Moody's Analytics said that during 2019, the Mexican economy will face the traditional phase of a slowdown which occurs during the first year of a new government.
"And in addition, the new government has announced plans to cut red tape in a very significant way, especially in high-ranking positions, during its first year," said Alfredo Coutino, the firm's director of Latin America and author of the report.
"All of this will have an immediate impact on unemployment and in consumer spending, which in turn will affect domestic demand and could aggravate the slowdown in 2019," he said.
The Mexican economy, the second largest in Latin America, began to experience a slowdown during the second half of 2018, due to the fact that the outgoing government contained spending and new hires, Coutino said.
But in spite of this, Mexico's Gross Domestic Product (GDP) could grow around 2 percent in 2018, the same level as 2017, according to Coutino.
"In 2019, the economy will be subject to the effects of contraction that comes with political transition," he said.
"During the beginning of a new government, there is always a delay in implementing a new federal budget," Coutino said.
President-elect Andres Manuel Lopez Obrador said he will reduce his salary by 60 percent, adjust the salaries and benefits of some 35,000 government employees and reduce the size of the government.
Lopez Obrador, of the leftist Morena Party, will take office on Dec. 1.
This time around, the adjustment period for the economy may take a bit longer due to the fact that the new government has an economic cabinet with less experience, Coutino said.
"All of this will be reflected in the usual slowdown in economic activity during the first year of the new government," he said.
"For this reason, the projected economic growth will be reduced to about 1.5 percent in 2019," Coutino said.
