The economy in election times: favorable winds for Mexico

The economy in election times: the winds of commercial geopolitics blow in favor of Mexico Mexico finds itself immersed in a bustling economic context as it approaches the largest elections in its history. The winds of commercial geopolitics are blowing in its favor, with economic growth above its Latin American counterparts and a currency strengthening to levels not seen since 2015. Despite this, concerns have not completely disappeared, as the next president, most likely a woman, will face significant economic challenges. Recent data shows that the Gross Domestic Product (GDP) has been stagnant for two consecutive quarters and fixed investment, crucial for future growth, has slowed down during the same period. Additionally, two significant deficiencies are pointed out: a delicate fiscal situation and the lack of a plan to attract investment looking to leave China. Despite the current optimism, it cannot be ignored that there are economic challenges that will require immediate attention. The cancellation of the construction of the new airport for Mexico City by President Andrés Manuel López Obrador before taking office generated uncertainty in the markets, reflected in a decline in investment and the exchange rate. The pandemic exacerbated the economic situation in the country, with a GDP contraction of over 8% and a slower recovery compared to other countries in the region. Although Mexico has managed to control inflation peaks, it has not yet reached the central bank's target of 3%. The Mexican economy is perceived as stable, but it is noted that the country is not fully capitalizing on the opportunities presented. Investors are now turning towards Mexico due to the trade war between the United States and China, positioning the country as an attractive alternative for nearshoring. However, there are criticisms that nationalist and populist policies may be limiting the potential for attracting investments. The fiscal situation, along with the management of state-owned enterprises such as the Federal Electricity Commission (CFE) and Petróleos Mexicanos (Pemex), poses significant challenges for the next Administration. Pemex's debt, the most indebted company in the world, represents an obstacle to sustainable economic growth. The current Government has made investments in infrastructure and social programs to boost consumption, leading to an increase in public spending and the issuance of bonds in the international market. The next Administration will inherit a more challenging fiscal landscape, which may require a future tax reform to ensure economic stability. The proposals of the presidential candidates reflect different approaches to the economy. While the ruling candidate promises to reduce the deficit without a tax reform, other candidates propose to boost nearshoring and promote the participation of the private sector in the economy. The electoral panorama presents uncertainty about the economic direction Mexico will take in the coming years. In this context, analysts agree on the importance of addressing economic challenges comprehensively and seeking policies that promote investment, sustainable growth, and fiscal stability. The decision made by the electorate in the upcoming elections will shape the country's economic course and define the challenges that the next Administration will have to face in a complex national and international scenario.