How Do Elections Impact Mexico’s Economic Prospects, Investment?By Andrea Villar | Thu, 07/01/2021 - 10:26
The results of the June 6 elections have sent a positive message to most of the country's business leaders. A counterweight in Congress, they say, will provide greater certainty for sectors like energy and infrastructure, while being a catalyst for foreign investment. However, the political power that President Andrés Manuel López Obrador holds outside the lower house poses further challenges to a stable and rapid economic recovery. Breaking this pattern of decision-making will be key to changing Mexico's perception in the eyes of foreign investors.
"Although we would prefer to see this government be more supportive of mining and accelerate the issuance of new mining concessions and new mining permits, we now feel a bit more comfortable investing in new mines in Mexico. These election results are generally positive for the Mexican economy as a whole and for foreign investment in particular. Mining plays a key role in the Mexican economy because most of its positive economic impact is in the poorer rural areas of Mexico. Mining careers provide some of the highest-paying jobs in the country, representing 3-4 percent of total employment"
Guillermo Eduardo Cruz
"As a capital fund, it was very important for us that our country's political leaders had a plan to reopen the economy, which would provide security and above all stability to the country's financial situation, with the fulfillment of commitments for domestic projects. Although we do not depend on government resources, our industry brings an extremely interesting and important number of foreign investors, who see Mexico as an attractive destination compared to mature countries. At the same time, investors are looking for stability while avoiding surprises that could affect returns. We believe that there will now be a balance in the stability of economic policy and that there will be resistance to situations that do not favor the entry of foreign investors into our country"
Rodolfo Alfonso Esquivel
"The strengthening of energy, infrastructure and agro-industrial policy in Mexico will be key to ensure a safe and quality investment climate, such as the one enjoyed by projects in the southeast of the country, like the Mayan Train and the refinery in Dos Bocas. We believe that this is not a political issue but rather a business issue, where the political class supports Mexican companies, accelerating the post-pandemic economic recovery while businessmen support politicians in the growth of the country"
"The protection of investment through the rule of law and the application of clear rules has been one of the most complicated elements during these first years of government. President Andrés Manuel López Obrador favored national and foreign investment during his term as head of the Mexico City government. He knows the need for investment in order to have an economically stable country and to generate the necessary taxes for the common good and social assistance. Only through investment is economic growth achieved and outside this paradigm, there is no medium or long term. The middle class, which depends to a large extent on investment by big business, has cast a critical vote in Mexico City. Our president should regain their interest and their investment protection. The uncertainty for investment present in these first years of his government is not positive either for the country or for a real transformation of the country. A change of course in this regard is to be expected in the remainder of the six-year term"
Juan Francisco Torres Landa
"The elections only provide limited assurances from the perspective of foreign investors. The main benefit is that without a super-majority in the House of Deputies, the possibility of modifying the Constitution without a vast negotiation with other electoral forces is now more complicated. That is a relevant fact but not sufficient to grant absolute certainty regarding the institutional ability to curb or limit the President´s excessive power. The investment climate in Mexico has deteriorated since late 2018 as a result of poor decisions involving the cancellation of huge projects that had already been awarded and that were in construction. Those questionable decisions by the federal government sent a wave of disagreement among local and international board rooms, which resulted in a severe drop in Mexico’s investment. Those funds will not get to Mexico due to the recent electoral results, at least not if the president’s decision-making pattern remains the same"
"The election has sent a loud and clear message that the institutional framework in Mexico is strong and not easily deterred. Not all countries can pride themselves on the high effectiveness of the INE, the large voter turnout and very low incident rate. This is a fantastic signal for the broader investor community and for Mexico’s long-term perspective. I think we will still see a struggle between two very opposite ideological views. Perhaps there will be more balance in the lower chamber but it remains very split. I do not see many of the core issues being completely resolved, so growth perspectives may continue to be challenged. However, given the fundamental need for infrastructure development in Mexico, the recent outcome of the election should provide greater comfort for the long-term view of investments"
Fernando Becerril Orta
"Unfortunately, expectations were not favorable for investment, neither local nor foreign. This perception was fueled by the possibility of an overwhelming election that would grant absolute power to a government that has not looked favorably on businessmen and that, therefore, generated distrust in the face of a complicated future. The balance achieved in the recent election generates a favorable change since all those sectors that are restless about the future of the country are reassured by an improving investment climate. Local and foreign capital will surely come to stimulate growth and with this, the economic perspective of our country is strengthened"
"The aerospace industry has gradually recovered from the pandemic. After the elections weakened MORENA, tourism will probably continue to grow. Seats won by the opposition will also drive investment expectations, which will create opportunities although some business people will still remain cautious when it comes to growth and new business. The investment climate is still uncertain for many sectors. However, the large turnout in these elections showed that part of the Mexican people demands a political change. Passenger, as well as cargo aviation, will strengthen as a result of increased confidence in the country’s recovery. Similarly, the second half of the year will see greater inflation, as well as stability in the exchange rate and in the growth of the national GDP"