MEXICO CITY—While most of the world’s largest economies embarked this year on spending sprees to cushion the economic hit from Covid, Mexico’s leftist President Andrés Manuel López Obrador has doubled down on budget discipline and austerity despite a rise in poverty.
When he took office two years ago, many economists feared that Mr. López Obrador would behave like other leftist leaders in Latin America, running up large deficits to fund welfare programs. Instead, he now faces criticism for not spending enough during the pandemic.
Mexico’s stimulus, either additional spending or tax breaks, ranks at the bottom of the Group of 20 nations at just 0.6% of gross domestic product, according to estimates from the International Monetary Fund. Among developing economies, Brazil’s stimulus is the relative highest, amounting to 8.3% of GDP, followed by South Africa and China, at 5.3% and 4.6%.
Mr. López Obrador has long been cautious about government overspending after he witnessed several Mexican debt crises in the 1980s and 1990s that led to peso devaluations, high inflation and government bailouts of private banks and other industries.
As a result, he has criticized forms of economic stimulus such as credit or tax breaks for companies to avoid laying off workers, which he sees as helping the wealthy at the expense of the poor.