The Mexican economy is poised for significant volatility as the United States concludes its presidential elections today. Analysts predict fluctuations in financial variables regardless of the election outcome, with the exchange rate expected to react first due to the uncertainty.
Exchange Rate Fluctuations Anticipated
The Mexican peso has already surpassed the 20 pesos per dollar mark, with short-term projections pointing to a rise up to 21.67 pesos. Analysts foresee the exchange rate stabilizing between 19.50 and 20 pesos by the end of the year.
“Given the contrasting policies of the candidates, we can anticipate volatility in the exchange rate,” financial analyst José Martínez stated. “The peso is often the first to adjust in uncertain scenarios.”
Interest Rates on the Rise
Interest rates are expected to increase as markets react to potential public policies that could influence inflation prospects. The anticipation of these policies is causing investors to adjust their strategies accordingly.
Different Paths, Similar Destinations
In the medium term, experts believe that while the overarching economic impact may not differ drastically regardless of who wins, the methods of managing the economy will vary significantly.
“Donald Trump tends to push negotiations to the limit, often intertwining multiple issues into single negotiations,” said economist María González. “This approach could affect trade talks and economic relations.”
Scenarios Based on Election Outcomes
Several scenarios have been outlined concerning exchange rate expectations:
- Trump Victory: Peso could fluctuate between 19.70 and 21.14 per dollar.
- Trump Victory with Republican Congress: Dollar may rise to between 21.14 and 22.26 pesos.
- Kamala Harris Victory without Democratic Majority: Exchange rate could be between 18.80 and 19.40 pesos per dollar.
- Harris Victory with Majority in Congress: Peso might strengthen, with the dollar between 18.30 and 19 pesos.
Manufacturing Sector in Focus
The manufacturing sector is expected to feel the most significant impact, particularly as the review of the United States-Mexico-Canada Agreement (USMCA) approaches in 2025. The 2026 review is anticipated to be complex, especially considering past opposition to the treaty.
Potential Tariff Changes Raise Concerns
Policy measures proposed by the next U.S. president will be crucial for the Mexican economy. President Trump’s rhetoric about increasing tariffs on all countries has raised alarms, especially within the automotive industry.
“The implementation of higher tariffs would be a severe blow,” warned industry expert Luis Pérez. “A 10% decline in vehicle exports could result in a 0.6% drop in Mexico’s real GDP, and the peso would likely depreciate sharply.”
The prospect of increased tariffs also raises fears about the possible dismantling of the USMCA, which could have far-reaching consequences for North American trade.
Job Creation Hits 13-Year Low in October
The Mexican Social Security Institute (IMSS) reported the creation of 138,000 formal jobs in October, the lowest figure for the month in 13 years. Despite being the second-highest monthly figure in 2024, the cumulative job creation for the first ten months stands at 594,556—a 2.7% growth rate but the lowest since 2020 when the pandemic resulted in the loss of over 518,000 jobs.
IMSS Director Zoé Robledo highlighted the need for continued efforts to boost employment and recover from the economic impacts of recent years.
Government Support Fails to Improve Pemex’s Financial Situation
A report by Mexico Evalúa reveals that the Mexican government has transferred 171 billion pesos to Pemex via the Ministry of Energy to bolster the oil company’s finances. However, instead of yielding profits, the state has incurred losses of 63 billion pesos.
“Between January and September, oil revenues fell by 6.1%, and the federal government’s share decreased by 57.5%, reaching its lowest level since 1990,” noted Mariana Campos, head of Mexico Evalúa. “This financial support has not improved Pemex’s situation.”
Consolidated Medicine Purchases Aim to Ensure Supply for 2025
The Ministry of Health, led by David Kersenobich, is returning to consolidated medicine purchases for 2025, aiming to secure a stable supply. Success hinges on awarding 90% of the 4,454 medicine and supply codes needed to meet the demands of 26 institutions.
The public call for bids will be issued in November, with contract awards in December and medicine deliveries starting in March 2025.
Fibra Shop’s Credit Outlook Upgraded by Fitch Ratings
Fibra Shop has seen an improvement in its long-term credit outlook, as Fitch Ratings upgraded it from ‘stable’ to ‘positive’ while confirming the ‘A+(mex)’ rating. The upgrade reflects continuous improvements in the company’s financial profile, driven by its growth strategy and the operational stabilization of the La Perla shopping center.
Fitch highlighted Fibra Shop’s strong operating performance and better leverage and interest coverage metrics as key factors in the revised outlook.
