“May you live in interesting times” is a Chinese curse that seems apt to describe Mexico at its current political juncture. Times are certainly interesting. With the election of Donald Trump in the U.S., much focus in recent months has been outward-looking. Indeed, political risk in the diplomatic sphere is perhaps higher than at any time in living memory.
Domestically, the current administration is on the cusp of its final year in office, and the lame-duck status that goes with it. The pre-campaign to elect a new President in 2018 is well under way, with a very real possibility that Mexico will elect its first ever leftist President. At the same time, recent high-profile incarcerations of former high-level government officials and narco-traffickers has shone a spotlight on corruption and organised crime like never before.
With imminent – and important – state-level domestic elections in June 2017, seen by many as a prelude to the Presidential elections taking place in July 2018, the scope for political and policy change in Mexico over the period to late-2018 is significant. In light of the single term limit on the Mexican Presidency, the incumbent, Enrique Peña Nieto, will give way to his successor on December 1st, 2018. Opinion polls suggest a three-way fight between Peña Nieto’s PRI, the opposition PAN – which held the Presidency from 2000 to 2012 – and Andrés Manuel López Obrador (AMLO), at the head of Morena, the movement he left the PRD – traditionally Mexico’s 3rd party, and for whom AMLO twice contested the Presidency – to form.
New numbers from the boffins in the CSO again make a mockery of how we measure economic activity. Sure, on the face of it, last year’s 5.2% GDP growth sounds more reasonable than the make-believe 26.3% recorded in 2015. Remember that prompted Nobel prize-winner Paul Krugman to call out Ireland’s ‘Leprechaun economics’?
Over the years, many economists in Ireland have argued that GNP – which strips out the repatriated earnings of multinationals – is a better measure of our economic progress. According to this measure, growth halved from 18.7% in 2015 to a still-stellar 9% in 2016.
But, even the most sunny-sided economists would struggle to claim with a straight face that this is a good indicator of Ireland’s true rate of economic growth.
*** This article was first published on thejournal.ie on 10 March, 2017 ***
This blog is two years old this week.
In 2013, two of the top three most popular posts in terms of hits were also in the top three for 2012, reflecting enduring interest in reading the tea leaves of Mexican politics during President Peña Nieto’s first, reform-heavy year in power (Mexico: A Political Risk Assessment; 2013 rank: 1; 2012 rank: 3) and in tracking the rise and fall of Ireland’s economy (The Boom Bust Life Cycle of Ireland’s Balance of Payments and Net Foreign Assets; 2013 rank: 2; 2012 rank: 2).
Third was an ‘Econ 101’ post breaking down the components of Irish GDP. Fourth was a post looking at Ireland’s Top 1%, and their income share which has been trending upwards since the mid-1980s. Rounding out the top five was a look at the psychology of taxation in the context of budget consolidation in Ireland.
Today marks the 75th anniversary of the nationalization of Mexico’s oil industry, exactly one week after President Enrique Peña Nieto celebrated his first 100 days in power.
Mexican Presidents are elected for a single six year term, taking office in December. In modern times, regime change has been associated with economic and political upheaval.
Felipe Calderon’s razor thin victory in 2006 gave rise lengthy street protests and an aggressive militarization of government anti-drugs efforts driven, at least in part, by the newly-elected President’s attempt to assert his authority and establish legitimacy. Continue reading
Here is the final paper for my course in ‘Managing Political Risk’ at Columbia with Ian Bremmer, Preston Keat & Ross Schapp. I enjoyed learning from the best!
1. Enrique Peña Nieto is long odds-on favourite to be elected President on July 1st, the first time PRI will hold the Presidency since losing it in 1997 after 71 years of unbroken rule.
2. Current polling suggests the PRI-PVEM alliance will comfortably secure a Congressional majority, raising the prospect of unified government for the first time since 1997 (NB: this did not subsequently come to pass; November 2012).
3. Unlike at past Presidential elections, no significant political or economic instability is anticipated to ensue, chiefly because Mexico’s macro fundamentals are now far stronger. Continue reading
The US Energy Information Administration (EIA) estimates Mexico’s shale gas reserves at 683 trillion cubic feet (tcf), roughly a quarter of US reserves.
At present, PEMEX has a monopoly on the extraction of hydrocarbons on Mexican soil, protected by article 27 of the constitution.
To date, PEMEX has drilled one shale gas well, and expects to drill three more by 2013. It’s longer term aim is to drill 4,000 wells to yield 1 billion cubic feet per day (bcfpd). Based on current estimates, this is equal to one sixth of total current gas production and roughly 9% of expected demand for gas by 2025. Continue reading