Claudia Sheinbaum was sworn in as Mexico’s first woman president on Tuesday, vowing to bolster women’s rights and ensure that Latin America’s No. 2 economy remains a secure destination for international investment.
Sheinbaum, a 62-year-old scientist and former mayor of Mexico City, took the oath of office and received the presidential sash in a boisterous ceremony in Mexico’s Congress, which marks the start of her six-year term.
“It is time for transformation, it is time for women,” she said with emotion.
“I am a mother, a grandmother, a scientist and a woman of faith, and from today, by the will of the Mexican people, the president,” she said.
Sheinbaum also used her first speech as head of state to address investor concerns after the passing of a judicial reform pushed by her predecessor Andres Manuel Lopez Obrador.
She reiterated the central bank would be autonomous and told investors: “Rest assured that the investments of national and foreign shareholders will be safe in our country.”
Alberto Ramos, head of Goldman Sachs Latin American economic research, said she will be judged on whether she can construct “a predictable and investment-friendly policy and regulatory framework.”
“Disciplined management of the budget and of state-owned enterprises, progress on public security, and safe-guarding the integrity of key institutions will be key to preserving market sentiment and sovereign debt ratings,” Ramos said, emphasizing the importance of the heavily indebted state energy firm Petroleos Mexicanos (Pemex).
On Pemex, Sheinbaum said the company will look to maintain daily oil production at 1.8 million barrels, about the same level they are at currently.
The November presidential elections in the United States, Mexico’s largest trading partner, could add to market volatility, especially if former President Donald Trump, who has vowed to increase tariffs on Mexican goods, wins.
Sheinbaum’s government will present its first budget before Nov. 15, which is expected to be highly scrutinized for clues on whether she will make good on commitments to reduce the fiscal deficit to 3.5% of gross domestic product from 5.9%, where it is predicted to close the year.
Continuity with change?
Lopez Obrador, whose six-year term began in 2018, managed to double Mexico’s minimum wage, reduce poverty and unemployment, broaden the base of social programs and oversee a previous strengthening of the peso. Touting these successes boosted his popularity and helped usher Sheinbaum, his protégée, to a landslide victory in the June elections.
Sheinbaum, however, who has promised “continuity with change,” will inherit the largest budget deficit since the 1980s and lagging economic growth.
Experts say Mexico’s economy will require a tax reform to increase revenues, though Sheinbaum has said publicly she does not plan a sweeping tax overhaul.
Instead, she has said she will pursue other options, including improving the efficiency of tax collection at customs.
Sheinbaum “will have to deliver an important fiscal consolidation if she wants to keep the positive view that markets have today towards her,” said Bernardo Keiserman, an economist at investment bank Bradesco BBI.
“We believe the government is committed to an adjustment, but delivering one sizable enough is not going to be an easy feat. The economy is weaker and likely weakening further,” Keiserman said.
Recently, the central bank cut its GDP growth forecast for this year to 1.5% from the previous 2.4% and lowered its estimate for 2025 to 1.2%.
Nearshoring, the trend of companies moving production closer to their main market, has helped Mexico attract investment, but Sheinbaum will face a challenge in trying to increase foreign direct investment while implementing the judicial reform.
The judicial reform, under which judges will be elected by popular vote, has scared investors and drawn criticism from the U.S. ambassador to Mexico who said it threatened the rule of law.
“I will govern for everyone and be assured that I will put my knowledge, strength, my history, and my life itself at the service of the people and the country,” Sheinbaum said.
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Publish date : 2024-10-01 23:05:00
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