- A KPMG survey reveals that 58% of executives mark the upcoming presidential race as the highest risk for their business operations in Mexico.
- Claudia Sheinbaum from the ruling party and Xochitl Galvez from the opposition are the main contenders for presidency.
- Almost half of the executive respondents express concern over the degradation of rule of law and escalating insecurity.
- Despite these worries, over 50% of respondents expect the growth of Mexican economy to persist at its current pace in 2024.
- Investment appeal of Mexico surpassed Brazil in the previous year, making it the most desirable destination for mergers and acquisitions.
The Presidential Race and Its Impact on Business
The KPMG conducted survey shows 58% of leaders believe the presidential race would heavily influence their operations, surpassing the threat of a potential economic slowdown.
Presidential Candidates and Their Influence
In the coming elections of June, Mexican voters will decide between the ruling party candidate Claudia Sheinbaum, a former Mayor of Mexico City, who promises continuity with the outgoing leftist President Andres Manuel Lopez Obrador’s policies, and Xochitl Galvez, the main opposition candidate, who proposes a more pro-business approach.
Current Electoral Standings
Sheinbaum currently leads in most polls, with Lopez Obrador’s popularity giving her a distinct advantage.
Risks Identified by Executives
About half of the 900 polled executives concur that the largest risk for Mexican companies lies in the erosion of the rule of law and worsening insecurity.
Risks related to rule of law and insecurity rocketed from the fourth spot in the previous survey to the top spot in the recent version, according to Gerardo Rojas from KPMG who communicated this to journalists in a press conference.
The Future of Mexican Economy
Over half of the survey participants anticipate Mexico’s economy to maintain its current growth rate in 2024, while 30% foresee stagnation. An additional 13% predict an impending recession.
Mexico’s Rising Investment Appeal
Last year, Mexico leapfrogged Brazil in terms of investment appeal, including mergers and acquisitions. “We were surprised by Mexico replacing Brazil in the ranking. Historically, Brazil was the preferred option,” mentioned Rojas.
He further explained that trade tensions between the US and China have inadvertently been advantageous to Mexico. The factor of nearshoring has enabled many companies to move their operations from Asia to Mexico, thus being more proximate to U.S. supply chains.
On the foreign exchange front, such circumstances could influence currency pair valuations, particularly for those investing in the forex market and focusing on Mexican peso or other Latin American currencies.