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Mexico Elects López Obrador as New President

Leftist candidate Andrés Manuel López Obrador achieved an overwhelming victory in Mexico’s 1 July presidential election after he captured a majority (an estimated 52.96 percent) of the popular vote in a multi-candidate contest. Partido Acción Nacional (PAN) candidate Ricardo Anaya was a distant second with 22.50 percent of the vote, followed by the ruling party (Partido Revolucionario Institucional, or PRI) candidate José Antonio Meade with a comparatively meagre 16.40 percent of the vote. The López Obrador-led leftist coalition also obtained a clear majority in the Mexican Congress, including an estimated 218 of 300 seats in the Chamber of Deputies and 24 of 32 seats in the Senate. In addition to receiving a clear mandate to govern from the Mexican electorate, López Obrador has more than enough legislative support to approve and implement his ambitious reform programme.

López Obrador was described in a 2 July opinion piece by The New York Times as “both a leftist ideologue and a pragmatic politician”, “a capitalist who calls for increased state intervention in the economy” and “a complex politician who has made seemingly contradictory statements throughout his political career and during the current political campaign.” While the economic commitments included in his campaign programme do not appear to be too far from the mainstream, it remains to be seen whether López Obrador will remain pragmatic and gradual in his actions, as many expect, or will adopt a more fervent leftist-populist stance while in office.

Among other commitments, López Obrador has pledged to completely root out corruption, enhance the transparency of the Mexican government, ensure that a larger segment of the population benefits from economic growth, and avoid debt-fuelled expansion of public finances by (i) working to end tax evasion, (ii) redirecting government spending away from ineffective bureaucratic tasks and into investment projects with a high economic and social impact, (iii) seeking a fiscal balance by adhering to strict financial discipline, (iv) looking for synergies between private and public investment in economic development policies, (v) promoting sustainable regional development, and (vi) and increasing the share of investment in gross domestic product in an effort to shore up economic growth.

Concurrently, López Obrador will seek to develop a tax policy that contributes to macroeconomic stability without increasing tax rates or creating new taxes. Enhanced tax compliance, a simpler and more user-friendly tax system, and better use of government resources will be promoted. The López Obrador administration will also ostensibly establish a public-private investment fund, based on Brazil’s model, with the goal of developing 25 to 30 high-impact projects during 2018-2024.

According to the newly elected president, Mexico’s foreign policy will not be limited to signing and re-negotiating free trade agreements. Rather, it should embrace a broader vision that includes an increased emphasis on multi-lateral action in co-ordination with like-minded strategic countries in such areas as immigration, human rights, science and technology, the environment, education and culture. López Obrador believes Mexico’s relationship with the United States should be re-thought in a frame of responsibility and prudence and has indicated that NAFTA, with all of its deficiencies, has had a positive effect on economic and trade relations with the United States and Canada. While López Obrador had previously been a long-standing opponent of NAFTA, he has since been persuaded of the need to preserve this arrangement and stay the course in the current re-negotiation process.

Mexico also intends to look for specific collaborative opportunities with mainland China, within the rules-based framework of relevant international organisations such as the World Trade Organisation and the World Intellectual Property Organisation, in areas where the mainland is a global leader including solar energy development, electronic commerce and the manufacture of high-speed trains. In addition, Mexico will promote growing commercial, investment, educational, tourism and cultural exchanges.

Content provided by Picture: HKTDC Research
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