探討：墨西哥 2024 年大選 (只提供英文版)

Porfírio Díaz, who served seven terms as the President of Mexico in the 1800s and early 1900s, is famous for building a strong state apparatus—and for some choice quotes.

These days however, Mexico’s proximity to the United States is a boon to its economy. For Western companies, the struggle to provide sufficient transparency and reliability of supply chains has inevitably driven them to consider neighboring countries as alternatives to Asia. Mexico is one of the biggest winners in this recalibration of supply chains, as unit labor costs are relatively low, the transport infrastructure is good, and there is an ecosystem of experienced maquiladora¹ workers and agile companies that can adapt to requirements quickly. This positive influence could run further. The US Government Accountability Office (USGAO) has compiled a list of “critical” minerals, and Mexico is a top-three supplier for 14 of them and has the potential to offer more, including lithium (key for electric vehicle batteries), bismuth (pharmaceuticals), graphite (semiconductors), lead and selenium. The last three are particularly valuable, as they can replace supplies from China.²

Mexico goes to the polls on June 2 to elect its new president. As Andrés Manuel López Obrador’s administration draws to a close, local business leaders and international investors are looking forward to the next sexenio³ being more orthodox and predictable. Some 98 million⁴ voters have registered, and the choice is effectively a referendum on López Obrador’s legacy.

López Obrador, or AMLO as he is known, is a 1970s-style, left-wing politician. He never prioritized the economy over his campaign to change Mexico’s governance model from the “neo-liberal” capitalist model closer to a 1970s-style paternalistic, political economy. As a result, there has been no help or encouragement from the government to the foreign companies that have committed to invest in Mexico as part of the supply chain recalibration. He has been explicitly hostile to foreign companies in the energy sector, strong armed companies like Iberdrola⁵ and Vulcan Materials,⁶ expropriated a hydrogen plant from Air Liquide,⁷ handing it to the state-owned oil company, Pemex, seized land for his flagship Mayan train project, and weakened the electoral commission. Yet, between 2019 and 2022, Japanese Foreign Direct Investment (FDI) has been US$1.4 billion; FDI from the European Union reached €14 billion, and US$35 billion has come from US companies. These flows, and strong growth in the United States, have helped keep the Mexican economy going and the currency strong.

The national oil company, Pemex, is at the heart of the AMLO project. The company has a long and sorry history of management for political objectives, resulting in powerful unions, a poor operating track record, negative free cash flows and a mountain of debt (US$106 billion⁸). In the AMLO administration, the company received tax reductions worth US$29 billion and cash injections of US$67 billion.⁹ In 2023, it averaged 1.5 million barrels per day of production and its refineries operated at 48% capacity utilization. Many investors are concerned that it is a growing drag on the country, especially after a series of downgrades and a negative outlook from Moody’s.¹⁰

The latest inflation print came in above expectations at an annual rate of 4.63%, which clouds expectations for central bank rate cuts, at least in the near term.

Generous pre-electoral social spending will likely take the budget deficit to 5%¹¹ of gross domestic product this year, putting more pressure on the next administration. Pensions were preferred, at the cost of healthcare, education and civilian security budgets. In our view, there is a real possibility of a ratings agency downgrade if the deficit is not reined in.

For Mexicans, AMLO’s weakness is a poor track record of improving security. His mandate was launched with the famous “hugs, not bullets” slogan, but homicides hit an all-time high on his watch. Last year, there were over 42,000 homicides,¹² which translates to 117 per day. His response has been to militarize security, giving the armed forces control over a wide and profitable collection of businesses, including the customs service, railways, ports, airports and all Mexican airspace. This will be difficult to reverse in the future and this trajectory suggests that the military could become a political and economic power like in Egypt or Pakistan.

AMLO’s candidate, Claudia Sheinbaum, leads the latest polls with 51.4%.¹³ She is expected to provide policy continuity, but business leaders expect less confrontation, as do foreign investors and the US State Department. Her big challenges will be how to engineer a reduction in the deficit in her first year to avoid a ratings downgrade, to deal with the Pemex conundrum and finally to deal with AMLO, who may not retire gracefully to the countryside.

She will hope for lower interest rates and lower spending on AMLO’s flagship infrastructure projects to ease financing constraints. She plans to uphold austerity measures while considering the role of public-private partnerships in funding green energy transitions. She is supportive of increased foreign direct investment (FDI). Fiscal reform will probably be piecemeal, Pemex will not likely be restructured, and the security situation will not likely improve. Her technocratic style means the party’s support is not unconditional and she may not be as neutral on foreign affairs as AMLO has been.

International investors would probably cheer a win for the main opposition candidate Xóchitl Gálvez, who is viewed as significantly more orthodox in terms of economic policy direction. She would encourage private sector investment in general and in the energy sector in particular, ending the favoritism shown to public sector companies in this administration. However, she is far behind in the polls and barring any upsets, it seems both portfolio and direct investors into Mexico may have to settle for the “muddle through” scenario instead. No matter who wins the elections, Mexico can take advantage of nearshoring opportunities and the enormous gaps in infrastructure to attract private investment.

The late Porfírio Díaz could not possibly have imagined that it is precisely his country’s close connection to the United States that overrides investor concerns and drives economic growth for the Mexican people.