Mexican Wealth Takes Flight to Escape AMLO's 'Transformation'
WHY YOU SHOULD CARE
Spooked by President Obrador’s anti-business approach, many are trying either to get out or get their money out.
By Isabella Cota
Lizbeth Díaz has never had this much business. In the past year, Díaz has hired five new staffers for the small legal consulting firm where she’s the head of operations. She’s seen a 40 percent rise in demand — the sharpest increase in her 13 years on the job.
Her business is helping Mexicans move abroad.
Nationally, President Andrés Manuel López Obrador enjoys a 70 percent approval rating a year after his landslide victory that broke decades of a two-party hegemony of the center-left Partido Revolucionario Institucional (PRI) and the conservative Partido de Accion Nacional (PAN) over Mexican politics. He refers to his six-year term as a “historic transformation” in progress. But his increasingly anti-business rhetoric and decisions aren’t only spooking investors. Many middle-class and wealthy Mexicans who fear he will pull the country down into an economic crisis are also trying to either get out or get their money out — and fast.
Most recent Central Bank data shows that in the three months after his election victory in July 2018, the total amount of money pulled out by Mexican residents and moved abroad jumped 59 percent. More than $4.5 billion dollars have been taken out of national bank accounts since the election, according to most recent figures. While the Central Bank doesn’t release data on where the money is headed, many Mexicans pulling their cash out suggest they plan to move it to the U.S.
This is a direct consequence of the new government, their new policies and the socioeconomic outlook.
Lizbeth Díaz, legal consultant, Mexico City
Legal immigration information website mequieroir.com (the name of the site translates to “I want to leave”) has seen a 50 percent increase in the number of users from Mexico in the last year, surpassing Colombians and even Venezuelans — despite the crisis in that country. Canada-based VisaPlace, a firm that provides legal immigration services, also reports an increasing number of Mexican nationals looking to apply for working visas in that country.
“This is a direct consequence of the new government, their new policies and the socioeconomic outlook,” Díaz says over the phone from Mexico City. “Clients are all giving us the same speech — Since López Obrador took office, things have gone from bad to worse and I don’t want to stick around to see how things will get.”
AMLO, as he is known in Mexico, went beyond commonplace promises like eradicating corruption and crime in his electoral campaign. He promised 4 percent annual economic growth, a rise in wages and new jobs for the country’s youth. But after winning the election, he canceled construction of a new $13 billion airport arguing it was “excessive spending” and shrugged off the drop in financial markets caused by his decision. AMLO has referred to rich business owners as a “rapacious minority” and brought back the long-forgotten derogatory slang term fifí that refers to everything rich and conservative. He commonly uses it to describe his critics.
His plan to heavily invest in “rescuing” the state-owned oil company PEMEX has failed to convince experts it will bring economic benefits for the entire country. He has also imposed massive spending cuts that led to thousands of government layoffs. His finance minister unexpectedly quit after eight months on the job, saying “public policy decisions have been made without sufficient supporting evidence” during this administration.
One after the other, economists at research firms, private banks and even the Central Bank have cut the country’s economic growth forecasts for the year to range between 1 and 0.7 percent — far removed from what AMLO had promised.
It’s a pattern Esther Bermúdez, director and founder of mequieroir.com, has seen before, in Venezuela, when their launch in 2001 coincided with the early years of the socialist policies of the current regime in that country. “When we first launched our webpage 18 years ago, we did so because we heard too many Venezuelans say ‘I want to leave. I am worried about my future and my family’s future if I stay,’” Bermúdez recalls. “Now we’re getting the same messages, verbatim, from Mexicans.”
For many middle-class Mexicans, AMLO’s policies are reviving familiar anxieties rooted in past economic downturns. In 1982, the government defaulted on its debt and consequently triggered a recession. Then in 1994, a sudden devaluation of the currency led to the first international financial crisis driven by investor flight. When global markets tanked in 2008, Mexico sank to its worst recession in 70 years. Some Mexicans have experienced traumatic economic downtown multiple times in one lifetime. Despite this history, the AMLO government hasn’t yet taken any steps to stanch the outflow of money from the country.
“We don’t want to wait and risk it,” says Pilar, a 34-year-old literary editor and daycare owner in Toluca, a city in central Mexico. (She asked to keep her last name private, as she fears a social media backlash by those who support the president.) “We may be fine now, but we see the writing on the wall, and we want to get out before the currency falls and our savings lose value.”
Pilar and her husband have been slowly converting some peso savings into dollars. They have also been speaking to friends and family members who live in Canada, as well as spending some time online researching their visa options. The plan is to start the application as soon as possible.
She says she understands that AMLO might appear a risk worth taking for those with few resources and little to lose. And wealthy Mexicans have “many options,” she says. It’s middle-class Mexicans who are most affected, she says. “Those of us who have worked hard to get a university degree, to become professionals … we are not going to risk losing what little resources we have over someone’s erratic decisions.”
- Isabella Cota, OZY Author Contact Isabella Cota