Bank of America Merrill Lynch Global Research (BofAML), one of the three largest financial groups in the United States, notes that the scenario in which Morena and her allies lose the qualified majority in the House of Representatives is positive for the Mexican economy, as this would limit the ability of President Andres Manuel Lopez Obrador on Magna Carta Modification.
We believe losing support for AMLO in the midterms would be beneficial to the economy, as it would limit constitutional changes and encourage institutions, such as the courts, to contain more changes. Most importantly, once the elections are over, the biggest source of political uncertainty this year will be eliminated and the overriding issues for the Mexican economy will be growth in the United States and the Covid-19, “as stated in their analysis.
In the document entitled “Mediating Elections in Mexico,” he asserts that his basic scenario for the June 6 mid-term elections is for Morena to end up with less than 51% of all votes in Congress – mainly due to the new rule of thumb. 8% is overrepresented – and that Morena’s coalition, PT, PVEM –Juntos Haremos Historia – is likely to lose the qualified majority, but will remain with a simple majority; That’s more than 50% of the total seats.
The report states that in these elections it will be at stake whether Lopez Obrador will gain support to unify his fourth shift from the House of Representatives or if his agenda is contained, because the legislative department of San Lázaro is where the budget was approved. Reforms in both the minor laws and the constitution that the Federal President has implemented.
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He clarifies that the scenario in which Morena and her allies lose the qualified majority could be realized given that Lopez Obrador will not be on the electoral ballot as in 2018; It is expected that there will be greater participation in the Baguio region and northern Mexico than in the elections three years ago; Because of the potential “beneficial vote” / protest votes against the president, after the major economic downturn, which was most severe in the past 50 years.
As well as new rules passed by the National Institute for Elections (INE) to prevent overrepresentation from over 8%, and undecided voters who can oppose Morena and his coalition, so historically they state that undecided voters tend to vote against the ruling. Ceremony.
“Less support for the AMLO agenda will allow Mexico to benefit more from US growth. Eliminating post-election uncertainty will help. Therefore, we have changed our forecast for GDP growth to 5% from 4% by 2021 and to 2.5% from 2.0%. % By 2022, the document states.
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It is reported that until now President Lopez Obrador was able to change the constitution and other laws to weaken or the structural reforms that were approved during the administration of Enrique Peña Nieto, such as education and energy.
“The political uncertainty brought about by these changes has a negative impact on investment and, most likely, on Mexico’s growth potential (investment was reduced by 11% in value in July 2018 – December 2020 compared to two and a half years ago),” cited .
He believes that if AMLO maintains its qualified majority in the House of Representatives, it will retain the ability to change the constitution and deepen changes during the second part of its administration from 2021 to 2024. It is stated that this may cause obstacles to investment and investment.
“ AMLO will have a stronger mandate to pursue its agenda, and the second half of his tenure is likely to look very similar to that of the first half (the status quo), with lower growth after weakening institutions and more political uncertainty in the context of a strict fiscal policy, with the risk of More constitutional changes that could further impede investment and potential growth, “ Confirms.