What will Mexico’s AMLO do?

Andrew Manuel Lopez Obrador: an unknown quantity

Who is Andrés Manuel López Obrador? asks Pamela Starr in The New York Times. Mexico’s president-elect cruised to victory in an election last weekend with 53% of the vote. AMLO, as he is universally known, has been labelled everything from “populist, leftist, authoritarian and nationalist” to “pragmatist” and “fiscal conservative”. The truth is that he is “all of the above”.

He wants to boost social spending and state intervention, but also describes himself as pro-business and has reversed his previous opposition to Nafta, the free-trade agreement with the US and Canada.

Mexican growth has averaged a “respectable if underwhelming” 2.4% per year during the six-year term of current president Enrique Peña Nieto, says Shannon O’Neil on Bloomberg View. He passed several structural reforms, including a landmark privatisation of the energy industry. Yet “fiscal mismanagement and greed” eroded public trust in the project, leading to last year’s “gasolinazo” fuel protests.

A crime wave and public fury over corruption ultimately did for Peña Nieto, says The Economist. Fighting graft is likely to be AMLO’s priority, but how he will actually achieve that objective, like so much else about his platform, remains unclear. “He seems to believe that his own example of personal virtue will be enough.” Similarly, the former mayor of Mexico City promises “prudent budgeting and no tax increases”, but also wants, rather inconsistently, to freeze energy prices, subsidise agriculture and double the old-age pension.

Markets are relaxed – for now

There is still “little clarity” about AMLO’s economic policies on everything from fiscal stimulus to the energy sector, agrees Edward Glossop of Capital Economics. However, markets have been mollified for now by the victor’s “conciliatory tone” about fiscal discipline and the central bank’s independence.

AMLO has “worked hard to placate capitalists”, says Craig Mellow for Barron’s. He has “waffled” on his pledge to undo Peña Nieto’s energy reforms and his pick for finance minister supports a “more or less” balanced budget. He has also laid into Trump less than one would expect of a leftist nationalist – probably wise given the White House’s apparent “delight in hanging the sword” of Nafta abrogation over its southern neighbour – 80% of Mexican exports head north.

Yet with a fondness for the “leftie toolkit” of subsidies and higher social spending, and no interest in furthering his predecessor’s structural reforms, it seems that AMLO has only “dim prospects of accelerating” Mexico’s “tortoise-like” growth rate.

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