AMLO’s mess in Mexico

published 18 July 2019

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.

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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".

Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.