Mexico’s Institutional Revolutionary party (PRI), out of office for 12 years, returned to power this week with the election of President Enrique Peña Nieto. His defeated opponent, Lopez Obrador, has said he may contest the result in court – as he did when he lost the last presidential election. Pre-electoral polling had suggested that the PRI could count on a majority in parliament, but these hopes have been dashed.
What the commentators said
Over the past two decades, Mexico’s economy has stabilised and inflation and debt have been brought under control. But growth has averaged just 1.8% a year between 2000 and 2011, which is “bottom-shelf tequila compared with sparkling Latin-American peers”, as Lex put it in the FT.
Mexican stocks have rallied to record highs because investors were expecting Nieto to give the economy’s growth potential a significant boost via long overdue reforms. These include scrapping red tape in the labour market and allowing private investment in Mexico’s state-run oil industry. He also wants to overhaul the tax code to boost government revenues.
But since 1997, no president has had a Congressional majority, said David Luhnow in The Wall Street Journal and “Mexico has failed to pass a major economic reform in that period”. The oil sector reform will demand plenty of horse-trading as it needs a two-thirds majority.
But even the other changes could now be hostage to vested interests. Don’t despair just yet, said John Paul Rathbone on Breakingviews. The party of the outgoing president is “reform-minded” and its presidential candidate has said she wants to co-operate. But instead of the “easy reform ride that markets priced in”, expect “bumpy news flow out of Mexico for a while yet”.