By Diego Oré
MEXICO CITY (Reuters) – Claudia Sheinbaum was sworn in as Mexico’s first girl president on Tuesday, taking the reins at a time the nation is scuffling with violence from organized crime and a hefty deficit in Latin America’s No. 2 economic system.
Sheinbaum, the 62-year-old scientist and former mayor of Mexico Metropolis, was inaugurated in a ceremony in Mexico’s Congress for a six-year time period lasting till 2030.
Her supporters chanted “President! President!” and “Lengthy reside Mexico!” after Sheinbaum took the oath of workplace in entrance of lawmakers.
Political watchers and analysts predict Sheinbaum will urgently look to calm buyers following the passing of a controversial judicial reform pushed by her predecessor Andres Manuel Lopez Obrador.
Markets might be seeking to Sheinbaum for “a predictable and investment-friendly coverage and regulatory framework,” mentioned Alberto Ramos, head of Goldman Sachs Latin American financial analysis.
“Disciplined administration of the price range and of state-owned enterprises, progress on public safety, and safe-guarding the integrity of key establishments might be key to preserving market sentiment and sovereign debt rankings,” Ramos mentioned, emphasizing the significance of state power agency Petroleos Mexicanos (Pemex).
The November presidential elections in the USA, Mexico’s largest buying and selling associate, might add to market volatility, particularly if former President Donald Trump, who has vowed to extend tariffs on Mexican items, wins.
Sheinbaum’s authorities will current its first price range earlier than Nov. 15, which is anticipated to be extremely scrutinized for clues on whether or not Sheinbaum will make good on commitments to cut back the fiscal deficit to three.5% of gross home product from 5.9%, the place it’s predicted to shut the yr.
CONTINUITY WITH CHANGE?
Lopez Obrador, whose six-year time period started in 2018, managed to double Mexico’s minimal wage, cut back poverty and unemployment, broaden the bottom of social applications and oversee a earlier strengthening of the peso. Touting these successes boosted his recognition and helped usher Sheinbaum, his protégée, to a landslide victory within the June elections.
Sheinbaum, nonetheless, who has promised “continuity with change,” will inherit the biggest price range deficit because the Eighties and lagging financial development.
Consultants have mentioned Mexico’s economic system would require a tax reform to extend revenues, although Sheinbaum has mentioned publicly she doesn’t plan a sweeping tax overhaul.
As an alternative, she has mentioned she’s going to pursue different choices, together with bettering the effectivity of tax assortment at customs.
Sheinbaum “must ship an essential fiscal consolidation if she desires to maintain the constructive view that markets have immediately in direction of her,” mentioned Bernardo Keiserman, an economist at funding financial institution Bradesco BBI.
“We consider the federal government is dedicated to an adjustment, however delivering one sizable sufficient is just not going to be a straightforward feat. The economic system is weaker and sure weakening additional,” Keiserman mentioned.
Not too long ago, the central financial institution lower its GDP development forecast for this yr to 1.5% from the earlier 2.4% and lowered its estimate for 2025 to 1.2%.
The incoming administration may also inherit a heavy monetary burden from state-owned Pemex, probably the most indebted oil corporations on this planet.
Nearshoring, the pattern of corporations shifting manufacturing nearer to their foremost market, has helped Mexico appeal to funding, however Sheinbaum will face a problem to extend international direct funding whereas implementing the controversial judicial reform handed within the dying days of Lopez Obrador’s presidency.
The judicial reform, below which judges might be elected by well-liked vote, has scared buyers and drawn criticism from the U.S. ambassador to Mexico who mentioned it threatened the rule of regulation.
