What is the best Afore in Mexico?
To improve savings:
1) Saving must increase through voluntary saving and forced saving.
2) The only way to increase forced savings is by increasing the mandatory contribution quota for workers.
3) Encouraging voluntary savings is going to be difficult. First you have to understand why people don’t save.
4) Voluntary savings have to be opened to more companies so that they can compete together with the Afores.
OPINION: The value of saving
The stabilizing development model that has been discussed so much recently cannot be replicated again in Mexico, especially because we have an open economy, but what can be learned is that at that time public investment was high compared to today. since it was at levels above 5% of GDP.
This public investment could be made thanks to the fact that the Government had orderly public finances with a deficit of less than 1%, despite the high public investment. The government deficit was small so it did not need significant debt.
Private savings represented 9% of GDP and public savings 5.4%, private investment reached 9.8% of GDP and public investment 5.5%, for this reason it is urgent to implement public policies to have greater internal savings.
OPINION: Investors and Afores, who are the conservatives?
Mexico faces the biggest economic crisis since 1932 and only with more public and private investment can we have a recovery in less time. The role played by the reforms that are carried out in order to have greater domestic savings as a source of investment will be essential.
Editor’s note: Jorge Sánchez Tello is director of the Applied Research Program of the Foundation for Financial Studies (FUNDEF). Follow him on LinkedIn and on Twitter. The opinions in this article are the sole responsibility of the author.
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