June 11, 2021


1. Election results show a divided Mexico

The June 6th elections recorded historic participation levels at 50%. Notably, the ruling Morena lost its qualified majority in the Chamber of Deputies. Therefore, if the president’s party wants to carry out constitutional reforms, it must ally with more parties to achieve it. In contrast, Morena gained territory in the country, obtaining 11 of the 15 governorships that were in dispute. With these victories at the regional level, most Mexican states are governed by Morena.

It is worth highlighting the case of Mexico City whose vote was split in half, one side led by the alliance between the PAN, PRI, and PRD, and the other by the Morena-PT coalition. This reflects the social sentiment in the country: on the one hand, those who unconditionally support López Obrador, and on the other, those who do not agree with how his administration has managed its agenda and have decided to “punish” the party for different reasons, including the accident on line 12 of the metro.

Animal Político: AMLO necesitará de la oposición para lograr eliminar autónomos y aprobar reformas.
El Financiero: La CDMX se ´divide´ en dos: así quedó el mapa tras las elecciones.
El País: Los resultados sientan las bases para la segunda parte del mandato de López Obrador y la carrera hacia 2024.

2. Changes in the Ministry of Finance and Banxico strengthen President’s agenda

To maintain macroeconomic stability in the country following the elections, President Andrés Manuel López Obrador nominated current Finance Secretary Arturo Herrera to the governorship of the Bank of Mexico (Banxico). Rogelio Ramírez de la O will take over as Finance Secretary. Herrera’s appointment must be approved by the Senate and Ramírez de la O’s by the Chamber of Deputies.

Although various analysts and organizations, such as the Association of Banks of Mexico, pointed out that these changes are a positive sign, representatives of PAN, PRI, and PRD highlighted the importance of protecting the autonomy of Banxico. Various analysts indicated that, due to the results of the election, López Obrador needs to “protect the budget,” so he needs an ally at the secretariat to carry it out.

El Financiero: Arturo Herrera deja Hacienda y será propuesto como Gobernador del Banco de México.
Animal Político: AMLO propone a Arturo Herrera como gobernador de Banxico; Rogelio de la O llega a Hacienda.
El Economista: Así reaccionaron políticos y funcionarios al anuncio de AMLO sobre Banxico y SHCP.

3. AMLO meets with businessmen to promote Mexico’s development

For the first time during his mandate, López Obrador met with businessmen members of the Mexican Business Council. The goal was to plan how to profit from the advantages that Mexico has in order to achieve sustained economic growth in the medium-term through investment, production and trade. The president indicated that taxes will not be increased and that they will not carry out any action that could affect the private sector. He indicated that the government and private initiative are working together for the development of the country.

Another central theme was how to benefit from the situation after COVID19, since Mexico has healthy public finances, a stable exchange rate, a single-digit inflation, as well as geographic and diplomatic proximity to the U.S. to encourage investment. The meeting took place four days after the elections and after the announcement proposing Arturo Herrera as governor of the Bank of Mexico.

El Financiero: AMLO se reúne con Slim, Claudio X. González y Azcárraga 4 días después de elecciones.
Forbes: Se reúne AMLO con el Consejo Mexicano de Negocios.
Milenio: AMLO se reúne con empresarios del Consejo Mexicano de Negocios.

4. U.S. strengthens ties with Mexico

During her visit to Mexico, U.S. Vice President Kamala Harris and President López Obrador signed a memorandum of cooperation to address the root causes of migration. During their meeting, economy-related issues and security were also discussed. Additionally, Harris announced an investment of USD $130 million to strengthen Mexico’s labor cooperation. The resources will be used in the following three years with the objective of advancing with the implementation of the 2019 labor reform.

In addition to this, the U.S. donated more than one million Johnson & Johnson COVID19 vaccines to Mexico. Foreign Minister Marcelo Ebrard declared that these will be applied to adults between 18 and 40 years of age to open the border with the U.S. It is expected that this month, the border can be reopened once the vaccines are applied.

El Economista: EU dará 130 millones de dólares para implementar la reforma laboral.
DW: Kamala Harris en México: la importancia de mantener una base democrática.
Infobae: México vacunará a todos los adultos en la frontera con las dosis Johnson & Johnson que envió EEUU: Ebrard.
El Universal: Kamala Harris anuncia más inversión en México y apoyo en migración, seguridad y aviación.

5. Mexican peso rises after election

After announcing the preliminary distribution of seats in the Chamber of Deputies, the peso advanced to its best level in almost five months, reaching MXN $19.7050 per U.S. dollar. The gains have made the currency accumulate a bullish trend of 0.2% so far this year. With this, the peso performed differently from other currencies in emerging markets.

For its part, the World Bank estimated that the Mexican economy will register GDP growth of 5% during 2021. This forecast is above the rate of 3.7% projected by the organism in January and below the 6.5% projected by the Undersecretary of Finance, Gabriel Yorio.

Forbes: Peso gana tras elecciones que acotan margen de acción de Morena.
El Economista: Banco Mundial ajusta al alza su expectativa de crecimiento para México y la deja en 5%.
El Financiero: El peso se muestra estable tras primeras ‘proclamaciones’ de triunfo.