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

The end of the era of optimisation
Global Economy

The end of the era of optimisation

A focus on maximising returns has made economies too fragile, says Edward Chancellor.
23 May 2022
Inflation is now at its highest since 1982 – is this the peak?
Inflation

Inflation is now at its highest since 1982 – is this the peak?

At 9%, UK inflation is at its highest for 40 years – and it’s not going anywhere soon, says John Stepek. That means you need to be much more active a…
18 May 2022
Get set for another debt binge as real interest rates fall
UK Economy

Get set for another debt binge as real interest rates fall

Despite the fuss about rising interest rates, they’re falling in real terms. That will blow up a wild bubble, says Matthew Lynn.
15 May 2022
Interest-rate rises mean more pain for stocks
Stockmarkets

Interest-rate rises mean more pain for stocks

Interest rates are rising around the world as central banks try to get inflation under control. That’s hitting stockmarkets – and there is more pain t…
13 May 2022

Most Popular

The world’s hottest housing markets are faltering – is the UK next?
House prices

The world’s hottest housing markets are faltering – is the UK next?

As interest rates rise, house prices in the world’s most overpriced markets are starting to fall. The UK’s turn will come, says John Stepek. But will …
23 May 2022
Scottish Mortgage Investment Trust has fallen hard. But is now the time to buy?
Investment trusts

Scottish Mortgage Investment Trust has fallen hard. But is now the time to buy?

After a spectacular couple of decades, the Scottish Mortgage Investment Trust has fallen by almost 45% so far this year. Rupert Hargreaves asks if no…
26 May 2022
Is it time to pick up growth stock bargains yet?
Investment strategy

Is it time to pick up growth stock bargains yet?

If you’re thinking of picking up some bargains from the tech stock crash, beware – there are still plenty of “growth traps” out there. John Stepek exp…
26 May 2022