Mexico’s President Andres Manuel Lopez Obrador won by a landslide, and his popularity has grown even more since he took office on Dec. 1.
AMLO is drawing huge popular support by raising minimum wages and social security pensions and giving thousands of college scholarships.
“He’s the first president in a long time who cares for the poor,” a bellhop in Mexico City told Andres Oppenheimer, a Miami Herald columnist who nonetheless sees trouble ahead for the president.
But all presidents have their ups and downs, and trouble signs are looming. What could end the honeymoon?
1. Overspending, underpaying
First, Lopez Obrador is spending much more than the country is likely to earn. Ending corruption, which is how Lopez Obrador said he will balance the books, isn’t enough without new investments, said Oppenheimer.
His decision to cut government salaries is triggering a stampede of talented government technocrats to the private sector. Often they are being replaced by less qualified activists of AMLO’s party.
Decisions such as scrapping a $13 billion Mexico City airport project, which will cost the country more than $5 billion in losses to indemnify contractors, have already lowered Mexico’s economic growth projections.
The International Monetary Fund cut its 2019 growth projection for the country from 2.5 percent to 2.1 percent, citing an expected drop in investments. Citibanamex bank lowered its forecast to a 1.4 percent growth rate this year.
2. Dependence on U.S. economy
Mexico’s economy may suffer a big blow if — as expected — the U.S. economy slows down or enters into a recession in late 2020 or 2021. The U.S. is by far Mexico’s biggest export market.
If the U.S. economy slows down, AMLO is likely to print more money to maintain his subsidies to the poor, rather than adopting IMF-recommended austerity measures. That would unleash inflation and start hurting people’s pocketbooks.
3. Trade and energy reform rollbacks
It’s unclear whether the U.S. Congress will approve President Trump’s new NAFTA trade deal with Mexico. And AMLO’s decision to roll back energy reforms that sought to attract foreign investments may further spook investors.
4. Dismantling education reforms
AMLO’s actions to dismantle education reforms, such as independent teacher evaluations, and to give more power to radical teachers’ unions, will make Mexico lose competitiveness against China and other emerging countries, Oppenheimer says.
5. Lack of emphasis on innovation
Oppenheimer is not convinced that the new government is interested in science and technology. María Elena Alvarez-Buylla, the newly appointed head of the government’s science and technology agency, CONACYT, told El Universal that her model country for science and technology planning is Cuba.
Cuba? The technologically backward country that produced only nine international patents last year, compared with 161 by Chile and 91,000 by South Korea? Oppenheimer concludes that Lopez Obrador is more married to old-fashioned leftist strategies over making Mexico inviting to tech and science innovators.
“AMLO is right to focus on the poor,” Oppenheimer says. “But unless he understands that without investments there is no growth, and that without growth there is no poverty reduction, Mexico is bound to go downhill two years from now — if not sooner.”
Argentina-born Oppenheimer is the editor and syndicated foreign affairs columnist with the Miami Herald, anchor of “Oppenheimer Presenta” on CNN En Español, and author of seven books. His column, “The Oppenheimer Report,” appears twice a week in The Miami Herald and more than 60 U.S. and international newspapers, including Reforma in Mexico City.
He was selected by the Forbes Media Guide as one of the “500 most important journalists” of the United States in 1993, and by Poder Magazine as one of the “100 most powerful people” in Latin America in 2002 and 2008.