Of the 193 members of the United Nations, Mexico has the world’s 12th largest economy. The United States’ southern neighbour is also a member of the G20 and the Organization for Economic Co-ordination and Development. Yet some foreigners tend to see it as simply a hot country with warm people, great food and a perfect setting for narco TV series.
The reality is more nuanced. Weather in Mexico ranges from an average of 8C to 33C, across a territory into which 24 European countries could fit quite easily. Mexico is the United States’ top trading partner with $1.1 million being traded over the border each minute in 2022.
At the same time, the country is highly unequal with the top 10 per cent of the population holding nearly 80 per cent of total wealth, according to the World Inequality Lab, while the bottom 50 per cent has negative net wealth of –0.2 per cent, meaning this group on average has more debts than assets.
An inflection point
Simple narratives about Mexico – its politics, its economy, its society – are destined to fall short. It is a large, diverse and complex developing country that is facing enormous challenges, opportunities and constraints. And with presidential elections coming in 2024, Mexico is at an inflection point.
The challenges ahead are both familiar and particular to the current moment. Long battles over institutional development, lack of access to basic social services and the complexities of sharing a border with the world’s most powerful economy persist. Indeed, in many areas these have grown more acute since the Covid pandemic.
Mexico’s big opportunities lie in its partnership with the US and unique advantages related to nearshoring.
By contrast, democratic retrenchment and the recent militarization of ostensibly civilian areas of government operations – from security to infrastructure development and even running a commercial airline – are by-products of President Andrés Manuel López Obrador’s weakening of democratic institutions. So, too, are current structural fiscal policy conundrums related to the state-owned oil enterprise Pemex and social spending.
Mexico’s big opportunities lie in its partnership with the US, increasing its productivity and its unique comparative advantages related to nearshoring. This makes the country a clear favourite for attracting investment. If properly leveraged, this could well help it move on from the low economic growth of past decades. The key challenge, then, rests in Mexico’s ability to convert expectations into reality.
Investment picked up in 2023 after a long period of stagnation. This was partly due to an acceleration in the construction of the president’s pet infrastructure projects, but also a result of increased private investment. All this should provide the next administration with favourable external conditions and an opportunity to usher in productive investments.
But there will be constraints on the next government’s ability to take advantage of these dynamics.
Culture of privilege
These include a culture of privilege, polarization, institutional deterioration, a continued lack of consistent economic growth, growing fiscal constraints derived from the inviability of Pemex, the scale of pensions and social spending and geoeconomic shocks outside of the state’s control. There is also the prospect of a more challenging policy environment in the US depending on the result of the American presidential election in November.
But first, on 2 June, 2024, some 98 million Mexicans will have the opportunity to vote for a new president, although turnout has hovered at around 60 per cent since 2000 and, unlike other Latin American countries, voting is not mandatory.
The next head of state will govern the country from 1 October, 2024, to 30 September, 2030. Voters will also be electing an entirely new Senate, which comprises 128 members with six-year terms, a new Lower House, which comprises 500 members with three-year terms, nine governors and more than 19,000 local officials.
For the first time in history, Mexico has two female candidates as frontrunners for the presidency. The ruling Morena coalition candidate is Claudia Sheinbaum, a former head of government of Mexico City. Her main opponent is Xochitel Galvez, representing the Frente Amplio coalition, formed by an ideologically diverse array of parties.
Claudia Sheinbaum is the frontrunner with a lead of about 20-percentage points over her opponent Xochitl Galvez.
Despite having little chance of winning, a third candidate representing the Movimiento Ciudadano party may also join the race to strengthen the party’s role as a ‘swing factor’.
Sheinbaum is an environmental engineer with an established trajectory in Mexico City politics and strong support from the incumbent president. Galvez, meanwhile, has an indigenous background and a respected career in national politics as well as in business. She has garnered support from the private sector and is running on an agenda of change, as opposed to Sheinbaum’s promise of continuity.
Still, the image of government that Galvez has projected thus far in her campaign resembles the administrations that preceded López Obrador, and she has yet to offer policy solutions that would be attractive to middle-class or disenchanted young voters, focusing on the future.
Although too early to rely on polls, Sheinbaum is the frontrunner with a lead of about 20 percentage points over her opponent. Galvez faces significant headwinds as she tries to make up ground, not least the current president’s popularity – which stands at around 60 per cent – and his administration’s dramatic increase in spending on social programmes, with more expected next year.
That said, an exponential increase in media and personal exposure over the past three months has significantly increased support for Galvez, while backing for Sheinbaum, long telegraphed as López Obrador’s chosen successor, may have already reached a natural ceiling.
The advantage of change
A majority of Mexicans view change as an advantage in the coming presidential election, believing López Obrador has done a poor job with respect to security, the economy and corruption, according to polls from El Financiero.
Far from a done deal, the election will largely depend on the ability of the competing parties to shore up their bases of support while appealing to voters who have grown apathetic amid rising levels of violence in parts of the country, a perception that corruption remains widespread, and disappointment over the promise of more improvements in economic conditions.
The selection of Mexico’s next president will help define two questions that are core to the social contract.
First, do Mexicans want to support and perfect their democracy, or do they prefer an autocratic regime? Latinobarometro’s most recent survey results from July 2023 show that 33 per cent of Mexicans would rather have an authoritarian regime, while 28 per cent are indifferent. This means that 61 per cent of Mexicans are willing to stand by as democratic norms are weakened.
Second, do Mexicans want a vibrant and competitive private sector that is adequately regulated by the government, or do they want an economy centred around an unproductive state-owned oil company and unsustainable social spending destined to compromise the broader economy? The relationships between Mexicans and democracy, and that of the state and the private sector need to be reconsidered.
What will it be, Mexico? The social contract and the future of 130 million citizens are up for grabs.
Source : Chathamhouse