José Ángel Gurría (Mexico, 1950) analyzes the challenges of the current economy with the broad vision that his experience as Secretary General of the OECD gives him, a position he held from 2006 to 2021. The former Secretary of the Treasury of Mexico also met with elEconomista .es on the occasion of his presence in the Imperial Springs International Forum (ISIF 2024), held in Madrid this week.
What conclusions are being drawn in this Forum?
There is a kind of common thread and it is the enormous concern that an administration headed by Donald Trump is going to cause in world trade, in the world economy in general. We know that he is not a big fan of multilateralism, that he likes the bilateral approach better, because generally in a bilateral approach, he is the strong one. Multilateralism has the logic that all countries together do more than an individual country and to that extent find solutions that can be shared. On the other hand, the bilateral approach is the other way around. We are seeing a world with uncertainty, but in some cases it is also preparing for the worst, for the impact that this may have on the global economy.
Do you think that the problem of drug trafficking and migration will be solved with tariffs?
Mexico and Canada have a free trade agreement with the US and now comes the fact that it imposes a 25% tariff because we simply have the issue of migration and drug trafficking. I believe that the immigration issue can be talked about. I understand that it is a problem for the US, that there are several million people who want to enter the country at the same time. But there are solutions for both this issue and for fentanyl, which is cooperation with technology. That is, having a desire to cooperate technologically with the drug issue. There is technology that makes it possible to catch a greater number of people who want to pass drugs across the border, almost in passing across the border. That is to say, you have some radars and some the ones I should carry.
What impact will tariffs have on monetary policy?
Inflation would rise and, of course, what would have to be done is raise rates or maintain rates at their current levels, which are already at 10% in Mexico and you cannot get any investment project at those levels.
In the middle of everything is China, which has emerged as a disruptor in this entire war, with its great capacity to produce…
It must be said that what they are doing in terms of production and technology is quite impressive and admirable. The problem with China is that, indeed, they are being very aggressive and then it invades the markets and the reaction of the rest is “I have to defend myself.” Instead of being something more organic and natural, China becomes a very aggressive player in terms of production and prices. Chinese cars are worth less than European or American electric cars. The automotive industry is an interesting case. By penetrating the markets in this way, they obviously generate resistance. Also because they are not companies themselves, that is, it is not a company that is present on a stock exchange, for example. It is not known what is behind it in terms of official Government subsidies. I think that this part is where there is more reaction and where the Chinese would have to work more. Because we already know that the cost of labor is already more or less comparable and they are no longer competitive with the West in that regard. So, how do they manage to be equally competitive and lower costs? I think that’s the big question.
Although we must accept that the Asian giant is also facing its own economic problems…
It seems like a drama that it is only growing at 5% this year, but it is natural. After 30 years growing between 10% and 8%, it is logical that it advances to 5% because it is reaching the level of stability.
What do you think that The Economist has classified Spain as the best economy in the OECD?
I must congratulate you. Politics makes a lot of noise but, the truth is that things are going well in Spain and we must remember that Spain is linked to a European Central Bank that depends rather on all of Europe, not only on Spain. The Bank of Spain sits on the board of the European Central Bank but the considerations are broad and of all kinds.
But the rest of Europe is more lethargic…
It is true, growth is very low in Germany and France also because of some mistakes they made, some failures that amounted to four points of GDP. But the level of European well-being is incomparable, that is, not only is it a high level of well-being, but it also reaches many people. That is, there are fewer cases of inequality between Europeans. It may vary with each country, but we are talking about an issue of well-being values that are shared. Universal healthcare, public education, infrastructure… all of this is very important and it is true that countries are going through great nightmares due to the issue of deficit and growth, but the system is maintained and will continue because there is a robust fiscal system.
The Argentine president, Javier Milei, has just completed one year in power and has managed to bring down inflation to figures never seen in the recent history of Argentina. How do you rate this first year of your Government on an economic level?
It must be recognized that the case of Argentina needed major surgery in economic terms. It has been cutting the deficit and lowered inflation to levels, indeed, never seen recently, but the problem is that economic activity has fallen through the floor and now, what needs to be done is to improve the economy. Let inflation, the exchange rate, be maintained… That is to say, you have controlled the fundamental variables but, let’s say, you are creating the foundations and now the structure is missing. These changes must be seen over the years, to see if they really work. Here, Europe, after the publication of the reports by Enrico Letta and Mario Draghi, I imagine you are aware of this situation.
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