Mexico, the United States’ largest trading partner, faces an uncertain economic outlook following the recent approval of a judicial reform and the president-elect’s stated intention to strengthen relations with China and Russia.
These political movements are causing concern both at home and abroad, while economic forecasts show signs of a slowdown.
This is according to an analysis published by two border experts in the binational economy, who consider that the changes to the independence of the Judicial Branch represent a “blow” to the Mexican economy, with a pessimistic prognosis for the rest of the year and for the next.
According to the latest report from the Border Modeling Project at the University of Texas at El Paso (UTEP), Mexico’s GDP growth forecast has been lowered to 1.5%, while consumption growth has been cut to 1.9%, and total investment growth has declined to 2.8%. These data reflect a loss of confidence in the country’s future economic performance.
Inflation for this quarter is estimated at 4.7%, and the value of the Mexican peso is expected to fall to 20.46 per US dollar, according to the research.
These indicators have set off alarm bells in financial markets, as the country’s economic stability appears to be faltering.
UTEP economic researchers Thomas M. Fullerton Jr. and Steven L. Fullerton point out that “economic uncertainty has reached levels rarely seen in Mexico. The independence of the judiciary could be on the verge of disappearing, at least partially.” This scenario has led to growth expectations for 2024 and 2025 being considerably more pessimistic.
The background to this uncertainty lies in the judicial reform approved by the Mexican Senate, led by President Andrés Manuel López Obrador’s Morena party. The constitutional amendment, quickly ratified by 17 of the 32 state legislatures, establishes that some 7,000 federal judges will be elected by popular vote, rather than being appointed and evaluated as until now. López Obrador signed the law just before Mexico’s Independence Day celebrations.
The change has raised concerns among business leaders and political analysts, who fear the reform will weaken the ability to stop executive orders, expropriations and appeals against government economic decisions. Judicial independence, seen as a pillar of economic and political stability, could be compromised, creating an environment of greater volatility.
As if that were not enough, the report notes, President-elect Claudia Sheinbaum Pardo has expressed her intention to bring Mexico closer to Moscow and Beijing, which has raised alarm bells in Washington and Ottawa, in relation to the United States-Mexico-Canada Agreement (T-MEC). The trade agreement, key to the economies of the three countries, will be reviewed on July 1, 2026, at which time the parties must confirm whether they wish to continue with the agreement.
López Obrador, the populist architect of the controversial judicial reform, is set to step down at the end of the month after six years in power. However, according to UTEP researchers, “even after Sheinbaum takes office on October 1, episodes of instability in financial markets are likely to continue.”
Monumental change
Last Thursday, a historic change took place in Mexico when the majority of its 32 states approved a sweeping overhaul of the country’s judicial system. In a monumental change, thousands of judges – from local courts to the Supreme Court – will be elected rather than appointed.
The move could trigger one of the most far-reaching judicial overhauls ever undertaken in any major democracy and has already caused deep division in Mexico.
But passage of the law was all but a foregone conclusion on Thursday, when President Andrés Manuel López Obrador announced his intention to publish the bill on Sunday, the eve of Mexico’s Independence Day.
“It is a very important reform,” said López Obrador, whose six-year term ends on September 30, during his daily press conference. “It reaffirms that in Mexico there is an authentic democracy, that the people elect their representatives.”
The outgoing president and his Morena party have championed redesigning the judicial system as a way to reduce corruption, influence peddling and nepotism and give Mexicans a greater voice. López Obrador’s successor, Claudia Sheinbaum, will take office on Oct. 1 and has fully backed the plan.
But judicial workers, judges, legal experts and opposition leaders argue that it would not adequately address issues such as corruption and would instead strengthen López Obrador’s political movement.
With the shadow of political and economic uncertainty looming over Mexico, many are wondering whether the country will be able to maintain its stability in the coming years or whether recent decisions will mark the beginning of an era of greater instability. The answer, it seems, only time will tell.
#UTEP #warns #blow #Mexican #economy
