Mexico’s Balancing Act: Political and Economic Uncertainty Ahead of 2024 Presidential Elections

Mexico, the twelfth-largest economy in the world, is facing a state of balance. While there are no immediate threats, substantial growth is also not imminent. The upcoming presidential elections on June 2, 2024 will be a critical test for the country. According to Oraculus, a poll aggregator, two observable trends are evident. Firstly, it is likely that Morena, the ruling party, will remain in power. Secondly, if this occurs, the party may struggle to have complete control over policy decisions as opposition parties are expected to gain control of regional governments and congressional seats. This political situation could lead to continued uncertainty and limited opportunities for change in Mexico.

On the economic front, several indicators have reached equilibrium. Inflation has shown decreased volatility since April 2023 and is expected to remain around 4% to 5% for the next three years. This stable inflation rate will prevent significant monetary policy changes from occurring. Despite forecasts of a decrease in the benchmark interest rate from 11% to 9.75% in 2024 and 7% in 2025, it will still remain one of the highest in Latin America due to high inflation rates. However, this high interest rate is expected to support strong performance from the Mexican peso with an anticipated exchange rate of 17.60 pesos per dollar by the end of 2024 and 19.20 pesos per dollar in 2025 after recent appreciation rates.

In conclusion, unless Mexico implements substantial structural changes through institutional reforms and investments in productivity growth will likely be delayed. The focus will now be on Mexico’s general elections alongside US presidential elections later in the year and new government’s economic policies transition.

In summary: Mexico faces a state of balance economically but needs institutional reforms and increased investments in productivity for sustained growth; upcoming presidential elections serve as a crucial test for political stability; stable inflation rates will prevent significant monetary policy changes while supporting Mexican peso’s strong performance; focus shifts towards general elections and new government’s economic policies transition with ongoing uncertainty and limited opportunities for change in Mexico’s political situation