Mexicans will head to the polls to elect a new president on Sunday.
Meet Andrés Manuel López Obrador, the front-runner since the beginning of the year, who could bring about the most drastic change Mexico has seen in recent years.
Don’t miss: What investors need to know about Mexico’s presidential election
Who is AMLO?
López Obrador, widely known by his initials as AMLO, is running for the leftist Morena party, which he founded himself in 2014. Morena is a Spanish acronym for the National Regeneration Movement, or Movimiento Regeneración Nacional. López Obrador is the former mayor of Mexico City and has run for president twice before, though on labor platforms and not under Morena’s banner.
Should he win, as is expected, “he would be the first president not to come from one of the country’s two main political parties,” said Oxford Economics’s Fernando Murillo and Eduardo Arcos.
What does he want to do?
Mexico hasn’t elected a left-leaning politician to lead the country since the 1980s. López Obrador’s firebrand stance and calls for change led to him being called Mexico’s answer to the rise of populist politicians around much of the world, albeit from a left-wing perspective. His “hustings rhetoric has been a match for two of the G20s other ‘disrupters in chief,” said Marc Ostwald, global strategist and chief economist at ADM Investor Services International, referring to President Donald Trump and Italian interior minister Matteo Salvini, leader of the far-right League party.
This could weigh on sentiment of foreign investors, of which Mexico has many, thanks to its relatively high official interest rates and high yielding assets.
That said, Mexican assets haven’t performed too well in the year so far. The peso
USDMXN, +0.6205%
dropped 1.2% against the U.S. dollar, and the iShares MSCI Mexico ETF
EWW, +0.16%
fell 5.2%, according to FactSet. Mexico’s S&P/BMV IPC stock market index was down 3.7% on the last trading day of the first of half the year. The S&P 500
SPX, +0.56%
,on the other hands, is up 2.3% since December.
The 64-year-old’s key campaign promises included counteracting corruption, decentralizing the federal government and provide access to free education on all levels. Energy sector proposals are also high on the candidate’s priority list. On the campaign trail, he said he would stop awarding oil contracts to private companies and halt the privatization of the electricity sector, a sharp break from the pro-business governments that came before.
What does it mean for the economy?
But “the state-led growth strategy of AMLO…would likely fail to boost the economy, as the target of a zero primary budget balance leaves limited room for fiscal expansion,” wrote Murillo and Arcos, adding that his “plans for higher public investment are likely to crowd out private capital expenditure because he is expected to delay the country’s landmark energy reform, which would deter companies from investing in the sector.”
What does it mean for U.S.-Mexico relations?
At the center of the challenges López Obrador will face if he is elected on Sunday will be dealing with the Trump administration on trade as well as immigration.
The North American Free Trade Agreement has been in renegotiation since August last year, and market participants expect the talks to continue well into 2019 before a solution is reached. While López Obrador said he would follow the current administration’s approach to Nafta, analysts said they wouldn’t be surprise by a more aggressive stance that could jeopardize reaching a deal and create significant uncertainty over Mexico’s economic outlook.
Source : MTV
