MEXICO CITY — For the second time in a month, top business leaders sat down with Mexico’s president to implore him to do more to save the economy.
People were losing jobs by the tens of thousands, they warned. Small and medium-size companies, which employ more than 70 percent of the Mexican work force, were running out of cash. The government needed to intervene, they argued. The data was irrefutable.
“I have other data,” shrugged the president, Andrés Manuel López Obrador, according to two businesspeople with direct knowledge of that conversation in April. “You do whatever you think you need to do, and I’ll do what I need to do.”
Across the globe, governments have rushed to pump cash into flailing economies, hoping to stave off the pandemic’s worst financial fallout.
They have mustered trillions of dollars for stimulus measures to keep companies afloat and employees on the payroll. The logic: When the pandemic finally passes, economies will not have to start from scratch to bounce back.
In Mexico, no such rescue effort has come. The pandemic could lead to an economic reckoning worse than anything Mexico has seen in perhaps a century. More jobs were lost in April than were created in all of 2019. A recent report by a government agency said as many as 10 million people could fall into poverty this year.
Yet most economists estimate that Mexico will increase spending only slightly — by less than 1 percent of its economy — a small amount compared with many large nations.
The reason? Critics and supporters agree: Mr. López Obrador.
Hostile toward bailouts, loath to take on public debt and deeply mistrustful of most business leaders, Mexico’s president has opted largely to sit tight despite what is expected to be widespread pain up and down the economic ladder.
“The government should help the private sector as much as it can, otherwise our gross domestic product could drop as much as 10 percent, which would be a disaster,” said Carlos M. Urzúa, a former minister of finance under Mr. López Obrador.
“It can be done,” Mr. Urzúa continued, noting the relatively low public debt levels in Mexico. But “López Obrador really has no clue of the storm that is coming.”
In a time of utter polarization in Mexico, when reactions to Mr. López Obrador vacillate between complete devotion from supporters and vitriolic anger from detractors, the need to mount an economic response has offered a rare glimmer of unity.
Still, Mr. López Obrador, a populist leftist, has resisted the pressure to do more, wary of taking on public debt and saddling the country with bills it may struggle to pay down the road.
Some of the pressure on Mr. López Obrador has come from predictable places: opposition politicians, pro-market economists and the wealthy business community, groups that tend to find wrong in nearly every step he takes.
But members of the president’s own cabinet have also urged him to take action, arguing that failing to do so could cripple the nation, government officials say. So, too, have federal bank officials and a range of economists sympathetic to his politics.
“Every day counts,” said Santiago Levy, an economist who was offered the role of finance minister in Mr. López Obrador’s government shortly after his election in 2018. “A recession was inevitable, but the cost of not doing more is going to be a much longer and deeper recession.”
A group of state governors, including one from Mr. López Obrador’s own party, has formed a coalition to demand that he do more to help them financially. Some have even threatened the equivalent of financial secession.
“We need a strategy of unity, and instead we have received absolutely nothing,” said Martín Orozco Sandoval, the governor of Aguascalientes in central Mexico.
The government says it will take a cautious approach to bailouts and heavy spending.
Graciela Márquez, the secretary of the economy, challenged assertions that Mexico could easily increase debt to spend more. The cost would be prohibitive, she said, and taking on debt liberally could ultimately be more problematic than beneficial.
“If at a certain point we need to raise more debt, we will,” said Mrs. Márquez, a Harvard-trained economist. “It’s not a closed-off road.”
For now, the government is spending more, she said, including by issuing micro-credits and other payments to the most vulnerable people.
As for whether that additional spending is sufficient, she noted that even the $2 trillion stimulus package in the United States has not been enough.
“What is sufficient under these conditions?” she asked. “It must be done responsibly, without generating more problems than the ones it is trying to resolve.”
Economic damage from the pandemic is a given. But the difference between a long, protracted crisis and a meaningful recovery, in the eyes of many economists, depends on a government’s ability to help companies and workers stay afloat until the worst is over.
European nations have spent trillions to counter the financial devastation and are considering raising more than $800 billion in collective debt to stave off economic collapse.
Some of Mexico’s Latin American neighbors have acted decisively: Chile, Peru and Brazil have all passed packages valued at 8 percent to 12 percent of their economies.
But in Mexico — between tiny business loans and spending for cash-transfer programs for the poor, the young and the elderly — additional government spending is less than 1 percent of the economy, most economists calculate.
Even before the coronavirus hit, Mexico was in recession. But the government agency that measures poverty recently said that 6.1 million to 10.7 million Mexicans could be cast into poverty by the end of the year. The president rejected that assessment and placed the number of formal jobs lost at around one million.
The actions taken so far include a series of microloans of about $1,000 to tiny businesses in both the informal and formal sectors. Experts say the two million loans available will barely scratch the surface of the informal market, where some 30 million people work.
And the money is not a grant; it is a loan that struggling mom-and-pop stores will need to start repaying in a few months.
“Mexico is way below the world’s average in terms of the amount of resources being channeled to help the economy,” said Oberto Vélez Grajales, an economist at Centro de Estudios Espinoza Yglesias, a left-leaning research group.
The president’s resistance, according to those who know him, is based on his interpretation of Mexico’s troubled financial history.
Having lived through numerous financial crises, including sharp devaluations of the currency and defaults on debt, he believes that bailouts and rescues simply do not work, they say.
He even wrote a book about the government bailout of the financial sector after the 1994 economic collapse known as the Tequila Crisis. Many viewed that aid as a poorly managed effort that lined the pockets of the wealthy.
Many economists and analysts say Mexico can afford to increase debt to help weather the crisis. But from the moment he took office, Mr. López Obrador, while calling himself a leftist, has won praise from analysts and economists for being a fiscal conservative.
To pay for the ambitious infrastructure projects and poverty programs central to his vision, the president has cut federal programs and his own ministries, unlike his predecessor, who ran a budget deficit.
But with the coronavirus lashing small, medium and large businesses, clinging to a more traditional vision of debt and bailouts has come under fire. So have the president’s pet projects, which he views as essential for the country.
Mr. López Obrador has dubbed his efforts the “fourth transformation,” seeking to imbue his tenure with the historical brio of Mexico’s independence from Spain and its revolution.
As part of that, he has promised large-scale infrastructure projects, including a $8 billion oil refinery and a tourist train to circumnavigate the Mayan region of southeastern Mexico.
Even as oil prices have plunged and experts have questioned the utility of the oil refinery, the president has held fast to his commitment to construct one.
In fact, he says, none of his marquis projects, including the multibillion-dollar train, will be sacrificed to the virus.
“This is typical AMLO, and yet it still surprises me,” said Carlos Elizondo, a former Mexican ambassador to the Organization for Economic Co-operation and Development, using the president’s nickname. “No other country in the world, amid a world pandemic and an emergency like this, continues on the same track.”
The president’s persistence has worked for him in the past. He lost two elections for the presidency but maintained his message against corruption and for benefits for the poor.
In 2018, Mexicans tired of rampant graft and inequality brought Mr. López Obrador to power with the most resounding victory the country had seen in decades.
“AMLO’s great strength was his stubbornness,” Mr. Elizondo continued. “Now, Mexico’s great weakness at a time when the world has changed is having a president that refuses to adapt to a new reality.”
Those close to the president say he believes that the coronavirus, while serious, is transitory and that his mark on his nation’s history, punctuated by the symbols of large, state-led projects, will outlast the current headwinds.
He says that having a clean conscience fights the virus. “No lying, no stealing, no betraying, that helps a lot to not get coronavirus,” he told reporters.
While critics demand that he shutter his infrastructure projects and channel the money into a rescue package, some economists say it would not be enough, anyway.
“At the end of the day, the amount of money being spent on infrastructure projects in 2020 is not that important,” said Mr. Levy, the economist. “The political significance is way beyond economic significance. It’s a little bit like Trump’s wall.”
“But you need to protect formal employment, and we need to do more to help informal workers,” he added.
Instead, state governors are vowing mutiny, and a tableau of economic disaster threatens the nation.
Tourism has all but dried up. Remittances from the United States are expected to plummet. And with oil prices flirting close to historical lows, Mexico’s economy has lost yet another engine.
“For all of them to take this hit at the same time is devastating,” said Roberta S. Jacobson, a former American ambassador to Mexico. “And meanwhile, the president appears to be only doubling down on policies he already had in place.”