Magazine article Global Finance

Gently Does It

Magazine article Global Finance

Gently Does It

Article excerpt

MEXICO

Investors are generally optimistic about the outlook in Mexico under new president Felipe Calderón.

He faces plenty of challenges, but Mexico's newly elected president, Felipe Calderón, might just be the right man to meet them. If anything, few people dare underestimate him any longer.

Against all odds, Calderón won the PAN party's nomination to become presidential candidate in the teeth of heavy opposition from outgoing president Vicente Fox and other PAN stalwarts. Then he managed to win the July 2006 presidential elections (albeit with a small margin) despite his rival, Andrés Manuel López Obrador, having handsomely led nearly all polls for more than a year before.

Winning the election, however, was just the beginning. The 44-year-old lawyer, economist and former energy secretary will have to bring to bear all his skills to help Mexico overcome a series of challenges that include low competitiveness, insufficient energy, growing crime and political instability. "He's shown that he's right-minded," says John Welch, chief Latin America economist with Lehman Brothers in New York. "He has an agenda for reform [and] has taken a different tack than Fox."

Fox was seen as too weak in dealing with opposition and was criticized for implementing too few reforms. "Calderón will do much more than Vicente Fox, but that is a low bar since Fox did nothing," says Pamela Starr, a Washington, DC-based Latin America analyst with Eurasia Group.

Welch praises Calderón for his choice of economic team, which includes finance secretary Agustin Carstens and former energy secretary Jesús Reyes-Heroles, who will lead state oil giant Pemex, Latin America's largest company.

While he does face some challenges, not all is bleak for Calderón as he takes over the reins. "Mexico is growing well," Welch says, pointing to a well-managed monetary policy, a reasonable exchange rate, continued high FDI and remittance levels, and solid exports. …

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