Claudia Sheinbaum, a distinguished climate scientist and protégé of Mexico’s popular outgoing president Andrés Manuel López Obrador, achieved a historic victory to become the country’s first female president. This landmark win, however, has sparked concerns in the financial markets due to the scale of her victory.
Historic Win and Market Reactions
Former Mexico City mayor Sheinbaum, 61, garnered 58.8% of the votes with 82% of ballots counted, achieving the highest vote percentage in Mexico’s democratic history according to preliminary results from the electoral authority. Sheinbaum, a physicist who was part of a United Nations panel of climate scientists that won a Nobel Peace Prize in 2007, expressed gratitude to López Obrador in her victory speech, praising him as “an exceptional, unique man who has transformed Mexico for the better.”
Despite the celebratory mood, the markets reacted negatively to her landslide win. The Mexican peso dropped about 3.4% against the dollar, and the stock market fell by 5% by Monday morning. Analysts like Jacobo Rodriguez from Roga Capital noted that investors are wary of the ruling coalition potentially securing a congressional super-majority, which could enable the passage of controversial constitutional reforms, particularly in the energy sector.
Electoral Context and Legislative Implications
Sheinbaum’s Morena party, along with its coalition partners, won a super-majority in the lower house of Congress but fell a few seats short in the Senate. This outcome means that while major reforms are not unfeasible, they would require support from some opposition senators.
López Obrador’s influence loomed large over the election, framing it as a referendum on his “transformation” agenda for Mexico. He had proposed several constitutional reforms in February, including pension hikes, minimum wage increases, and the abolition of some regulatory bodies. These proposals, viewed by investors as radical and unsustainable, were rejected by lawmakers but remain a point of concern under Sheinbaum’s administration.
Sheinbaum’s Promises and Challenges
Sheinbaum has pledged to continue many of López Obrador’s policies, particularly those aimed at helping Mexico’s poorest. However, she faces the daunting task of managing a hefty budget deficit and low economic growth. Despite opposition claims that she would be a “puppet” of López Obrador, Sheinbaum insists on carving out her own presidential legacy while advancing his successful welfare policies.
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Her main opposition rival, Xóchitl Gálvez, conceded defeat after securing just 28.1% of the votes. Sheinbaum’s victory underscores a significant step for Mexico, known for its macho culture and home to the world’s second-largest Roman Catholic population. She is the first woman to win a general election in North America, encompassing the United States, Mexico, and Canada.
Security and Economic Priorities
Improving security remains one of Sheinbaum’s primary promises, yet details have been scant. The election, marked by violence with 38 candidates murdered, highlighted the pervasive crime problems in Mexico. Over 185,000 people were killed during López Obrador’s term, although the homicide rate has slightly decreased.
Economic challenges also loom large. Sheinbaum will have to navigate tense negotiations with the United States over migration and drug trafficking, particularly if Donald Trump, who has proposed tariffs on Mexican-made Chinese cars and military action against drug cartels, wins the U.S. presidency in November. Domestically, she must address electricity and water shortages and leverage the nearshoring trend to attract manufacturers.
A critical issue is the future of Pemex, the state oil giant burdened with debt and declining production. Alberto Ramos, chief Latin America economist at Goldman Sachs, emphasized the need to rethink Pemex’s business model to avoid continued financial losses.
Looking Ahead
Sheinbaum’s tenure begins on October 1 for a six-year term. As she prepares to take office, she will need to balance continuity with innovation, addressing the deep-seated economic and security challenges while maintaining the social welfare advancements that have defined López Obrador’s presidency. Her ability to navigate these complex issues will determine her success and the future trajectory of Mexico.
