Features

AMLO’s mess in Mexico

The resignation of Mexico's finance minister has cast a shadow over Andrés Manuel López Obrador (AMLO), Mexico’s “leftist firebrand” leader.

The business community has always been wary of Andrs Manuel Lpez Obrador (AMLO), Mexico's "leftist firebrand" leader, says Ian Bremmer in Time.

Yet concern about his policies was tempered by a grudging respect for his commitment to "fiscal discipline and general macro stability". That had been underlined by his decision to hire the "widely respected" Carlos Urza as finance minister. Yet Urza resigned last week, firing off a "blistering" letter that lashed out at dubious appointments and "extremist" economic policies. The Mexican peso fell by 2% against the US dollar.

It looks as though "powerful members of the left-wing government are pushing for looser fiscal policy", writes Edward Glossop for Capital Economics. The central paradox of AMLO's administration has been that it wants to pay for "ambitious social programmes" while not increasing debt, adds Elisabeth Malkin in The New York Times. It said it would find the extra money by rooting out corruption, but in practice the finance ministry has been making deep cuts to non-priority areas, such as higher education, to balance the books.

The trouble now, says John Authers on Bloomberg, is that Urza's broadside will fuel suspicions that the new president is "an extremist prone to appointing cronies". Downgrades to the country's debt look "very likely".

Recommended

Too embarrassed to ask: what’s the difference between producer price inflation and consumer price inflation?
Too embarrassed to ask

Too embarrassed to ask: what’s the difference between producer price inflation and consumer price inflation?

Two of the most important indicators for the economy are “producer price inflation” and “consumer price inflation”. But what are they and what do they…
13 Apr 2021
How the Covid-19 vaccine crisis is putting the EU in danger
EU Economy

How the Covid-19 vaccine crisis is putting the EU in danger

The botched coronavirus vaccine campaign will cause long-term harm to the EU's economy, says Matthew Lynn.
4 Apr 2021
What does Joe Biden’s $3trn infrastructure plan mean for your money?
US Economy

What does Joe Biden’s $3trn infrastructure plan mean for your money?

Joe Biden is set to announce a further $3trn of public stimulus in the US. Saloni Sardana looks at what’s on the table, and what effect it could have …
30 Mar 2021
The European Central Bank fumbles its way towards yield curve control
EU Economy

The European Central Bank fumbles its way towards yield curve control

The EU’s economic recovery is faltering, but its bond yields keep rising. That makes things tricky for the European Central Bank, says John Stepek. He…
12 Mar 2021

Most Popular

The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021
Four investment trusts for income investors to buy now
Investment trusts

Four investment trusts for income investors to buy now

Some high-yielding listed lending funds have come through the crisis with flying colours. David Stevenson picks four of the best.
12 Apr 2021
Central banks are rushing to build digital currencies. What are they, and what do they mean for you?
Bitcoin

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?

As bitcoin continues to soar in value, many of the world’s central banks are looking to emulate it by issuing their own digital currencies. But centra…
8 Apr 2021