Sheinbaum to be sworn in as first woman president in Mexican history
By Diego Oré
MEXICO CITY, Oct 1 (Reuters) -Claudia Sheinbaum will make history on Tuesday when she is sworn in as Mexico's first woman president, while inheriting challenges to quell violence from organized crime and reduce a hefty deficit in Latin America's No. 2 economy.
Sheinbaum, the 62-year-old scientist and former mayor of Mexico City, will be inaugurated at a ceremony in Mexico's Congress for a six-year term lasting until 2030.
Political watchers and analysts predict she will urgently look to calm investors since the passing of a controversial judicial reform pushed by outgoing President Andres Manuel Lopez Obrador.
Markets will be looking to Sheinbaum for "a predictable and investment-friendly policy and regulatory framework," said Alberto Ramos, head of Goldman Sachs Latin American economic research.
"Disciplined management of the budget and of state-owned enterprises, progress on public security, and safe-guarding the integrity of key institutions will be key to preserving market sentiment and sovereign debt ratings," Ramos said, emphasizing the importance of state energy firm Petroleos Mexicanos (Pemex).
The November presidential elections in the United States, Mexico's largest trading partner, could add to market volatility, especially if former President Donald Trump, who has vowed to increase tariffs on Mexican goods, wins.
Sheinbaum's government will also present its first budget before Nov. 15, which is expected to be highly scrutinized for clues on whether Sheinbaum will make good on commitments to reduce the fiscal deficit to 3.5% of gross domestic product from 5.9%, where it is predicted to close the year.
CONTINUITY WITH CHANGE?
Lopez Obrador, whose six-year term began in 2018, managed to double Mexico's minimum wage, reduce poverty and unemployment, broaden the base of social programs and oversee a previous strengthening of the peso MXN=. Touting these successes boosted his popularity and helped usher Sheinbaum, his protégé, to a landslide victory in the June elections.
Sheinbaum, however, who has promised "continuity with change," will inherit the largest budget deficit since the 1980s and lagging economic growth.
Experts have said Mexico's economy will require a tax reform to increase revenues, though Sheinbaum has said publicly she does not plan a sweeping tax overhaul.
Instead, she has said she will pursue other options, including improving the efficiency of tax collection at customs.
Sheinbaum "will have to deliver an important fiscal consolidation if she wants to keep the positive view that markets have today towards her," said Bernardo Keiserman, an economist at investment bank Bradesco BBI.
"We believe the government is committed to an adjustment, but delivering one sizable enough is not going to be an easy feat. The economy is weaker and likely weakening further," Keiserman said.
Recently, the central bank cut its GDP growth forecast for this year to 1.5% from the previous 2.4% and lowered its estimate for 2025 to 1.2%.
The incoming administration will also inherit a heavy financial burden from state-owned Pemex, one of the most indebted oil companies in the world.
Nearshoring, the trend of companies moving production closer to their main market, has helped Mexico attract investment, but Sheinbaum will face a challenge to increase foreign direct investment while implementing the controversial judicial reform passed in the dying days of Lopez Obrador's presidency. The judicial reform, under which judges will be elected by popular vote, has scared investors and drawn criticism from the U.S. ambassador to Mexico who said it threatened the rule of law.
Reporting by Diego Ore; writing by Cassandra Garrison; editing by Stephen Eisenhammer and Leslie Adler
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
