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Mexico – Anti-US Sentiment a Boon for AMLO

President Enrique Peña Nieto is about to enter the final year of his term, and with his abysmal approval rating severely limiting his potential to make a lasting mark during his remaining time in office, the attention of the electorate has turned to the 2018 presidential election. Among Peña Nieto’s many failures is his perceived unwillingness to defend Mexico’s national honor and sovereignty in the face of repeated insults and threats of punitive policies from US President Donald Trump, and the early read of next year’s presidential election suggests that the new US leader will loom large in the Mexican campaign, and could be a major factor in determining who emerges victorious.
While Trump has been a curse for Peña Nieto, his antagonistic posture toward Mexico has been a blessing for Andrés Manuel López Obrador, a firebrand leftist populist who enjoyed great popularity as mayor of Mexico City and came close to winning the 2006 presidential election as the candidate of the PRD. López Obrador, popularly known as AMLO, relishes a good political fight, as he showed during a prolonged campaign to overturn the results of the 2006 election, which, at times, bordered on insurrection.
However much Mexican voters might desire a president who is willing to deliver a figurative punch to Trump’s nose, a victory for AMLO would hardly be in the country’s long-term interests. During his stint as mayor of Mexico City, AMLO gained a reputation as a leader who was better at coming up with popular policies than smart ones. In a similar vein, his promise to reverse Peña Nieto’s energy-sector reforms, his embrace of protectionist trade policies, and his exploitation of growing anti-US sentiment among the Mexican population are difficult to square with the economic realities facing Mexico.
At present, investors do not appear to be anxious about the prospect of an AMLO presidency, but the peso did get a boost following the surprisingly narrow defeat of MORENA’s gubernatorial candidate in the recent election in Mexico State. The peso has rebounded from a steep slide in the immediate aftermath of last year’s presidential election, amid signs that Trump’s policy agenda is stalling. To the extent that the firming of the peso indicates that investors are keeping a close watch on political developments in both the US and Mexico, there is every reason to assume that market turbulence will increase if AMLO widens his lead over the coming months.
Since 1979, The PRS Group Inc., has been a global leader in quant-based political and country risk ratings and forecasts. For more information on The PRS Group and its wide range of risk products, go to: www.prsgroup.com, or contact us at (315) 431-0511 and sales@prsgroup.com

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