Third time’s a charm: As expected, voters in Mexico’s historic election this past Sunday (1 July) elected Andrés Manuel López Obrador (AMLO, as he’s widely known) as their new president. The 64-year-old left-wing populist founded Morena, the National Regeneration Movement, in 2014, which has since emerged as a powerful political force.
Making Mexico’s election more unique this year, voters were also tasked with electing an entirely new Congress. Under Mexico’s constitution, previously elected members of the legislature are no longer eligible to serve. Sunday’s elections were the largest in Mexico’s history, with voters filling more than 3,200 positions at all levels of government, including 628 members of the National Congress.
Described recently by the Financial Times as “a leftist nationalist with a sincere concern for the poor, a seductive message of renewal and a vivid sense of history,” López Obrador ran on a platform that denounced crime. He vows to crack down on corruption and violence, while promising to invest in the poor, elderly, and disabled. His victory represents a rejection of traditional politicians and the change Mexicans so badly want in order to see the promises of their country fulfilled.
What does López Obrador’s victory mean for the economy?
While his victory marks the first time a left-leaning leader has won the presidency since Mexico began its transition to multiparty democracy over 30 years ago, early indicators show López Obrador's pro-growth agenda will ultimately be more benign and investor-friendly than the market’s worst fears (per Paul Greer, a London-based portfolio manager at Fidelity International).
Traditionally a vocal critic of big business, he has toned down his rhetoric in the run up to the election, portraying himself as more pro-business and more pro-American. Though an economic nationalist, López Obrador has vowed to respect investors and not seize businesses. Indeed, most economists believe the main driver for Mexican assets in near term likely will be NAFTA negotiations, not domestic politics. With the political uncertainty that surrounds an election now removed, and the result not unexpected, some experts anticipate short-term relief in Mexican markets as pre-election hedges are backed down.
What does this mean for the corporate relocation industry?
Only time will tell what this presidency will mean for the economy and consequently, what it will mean for foreign investment and relocation to Mexico. One early positive indicator, Carlos Manuel Urzua, who has been confirmed as Finance Minister, seems to favor fiscal prudence. There may be some media dust kicked up over a leftist-nationalist as the country’s executive, but most do not think Mexico is heading down Venezuela’s path. The messages thus far are policy pragmatism, fiscal responsibility, and national unity… all while committing to define a workable NAFTA structure. Stability and an appetite for growth would fuel mobility activity as well.
"Foreign investment in Mexico has grown steadily for many years, and the president-elect has already spoken about the importance of NAFTA and other commercial treaties. In addition, the peso has already started to revalue since the close of the election. While we are still in the early days, Mexico is a resilient, forward-looking country, and we feel positive about the future of global mobility growth in Mexico," says Jackie Dorfsman, Director of Client Services, Dwellworks Mexico.
We’re only a few days in, and the president is not sworn in until 1 December, but all eyes are certainly on Mexico as López Obrador steps to the global stage.