Left-winger Claudia Sheinbaum will be Mexico’s next president after an electoral landslide. Sheinbaum secured between 58% and 60% of the vote in Sunday’s presidential election, compared with about 28% for her main conservative rival.
Sitting president Andrés Manuel López Obrador (known as AMLO) was prevented from seeking re-election by term limits, with Sheinbaum pledging to carry forward his political programme. AMLO is hugely popular, but has had a fraught relationship with investors during his six-year term in power.
Nevertheless, the country’s IPC stock index has gained more than a fifth over the past five years, while economic growth has been creditable. That’s not a bad showing given AMLO’s background as “a self-proclaimed leftist revolutionary”, says Barron’s. While social spending has risen, he has avoided budget splurges for most of his presidency.
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Debt remains a reasonable 50% of GDP. Mexico has been the biggest winner of the US-China trade war, which has seen vehicle and electronics manufacturers scramble to relocate to America’s southern neighbour. AMLO’s legacy might prove a poisoned chalice, says The Economist. Gang violence is rampant and corruption is as rife as ever. Yet Mexicans were sceptical that the opposition would do a better job, and many working-class and rural voters are “in thrall” to the charismatic AMLO and Morena, the governing party.
Will Claudia Sheinbaum bring change?
Mexican markets have been in party mode, says Michael Stott in the Financial Times. Stock issuance tripled last year and corporate bond sales were the highest in eight years. It's been argued that Sheinbaum offers continuity with “a dash of technocratic modernity”. But the Mexican “revellers” have been ignoring some rather “large elephants” in the room.
Cartels now control an estimated third of the nation’s territory, by one estimate, and public finances have weakened after AMLO ditched austerity to engage in a pre-election spending bonanza – the country is now running its highest fiscal deficit since 1988. Mexico boasts “a rising middle class” and “enviable demographics, with a median age of 30”, says Mary Anastasia O’Grady in The Wall Street Journal. But economic progress has come “despite AMLO, not because of him”.
His endless feuding with courts that blocked his orders has undermined the rule of law. Now Sheinbaum is championing reforms such as direct elections to the Supreme Court that could steamroller the last remaining opposition to Morena. The ruling party also secured a two-thirds supermajority of the seats in the Mexican lower house and almost as many in the Senate, leaving it well-placed to pass constitutional amendments.
That prospect triggered an earthquake in Mexican markets on Monday, says John Authers on Bloomberg. The S&P Mexico Bolsa index plunged almost 10% in dollar terms, its third worst day in two decades. The sharp sell-off is “probably” an overreaction, but there’s no doubt that the prospect of Mexico taking an authoritarian turn is “terrifying” investors.
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