Political Risk Analysis - Third Time Lucky: AMLO Likely To Win Presidency - MAY 2018

BMI View: Leftist-populist candidate Andres Manuel Lopez Obrador (AMLO) is likely to win Mexico's July presidential election. However, investor fears that he will reverse key economic reforms are likely overblown, and we do not anticipate a major change in Mexico's growth trajectory.

We believe leftist-populist Andres Manuel Lopez Obrador (AMLO) is likely to win the Mexican presidential election on July 1, placing the probability of his victory at 65%. Dissatisfaction with the country's 'established' parties due to corruption and security concerns, AMLO's more credible anti-corruption credentials, and the likelihood that a larger field of candidates could bring down the threshold for victory to as low as 30% support this view ( see 'Crib Sheet: AMLO Early Favourite As Field Takes Shape', December 18 2017). AMLO is currently well ahead in most polling, with an 8.6% lead over the conservative Partido Accion Nacional (PAN)'s Ricardo Anaya and a 15.6% lead over ruling left-of-centre Partido Revolucionario Institucional (PRI)'s Jose Antonio Meade Kuribrena (Meade) in an amalgamation of data from major pollsters. While AMLO is currently the frontrunner, we acknowledge a lot can happen as formal campaigning begins, including shifts in support among coalitions and independent candidates, which could significantly alter the makeup of voter intentions.

Dissatisfaction with the status quo is eroding support for Mexico's major establishment parties, the PRI and PAN. The PRI especially has been at the centre of a number of major corruption scandals in the last few years, with the most recent resulting in the arrest of the party's former treasurer in December 2017 on allegations of channeling public money via phony contracts to support political campaigns. Additionally, a deteriorating security environment amid increasing drug cartel violence and homicides is prompting Mexican voters to turn away from the ruling party. President Enrique Pena Nieto's approval rating was at 26.0% at the five-year mark of his term in November, less than half that of his immediate predecessor at the equivalent period and continuing a downward trend in government confidence seen over the past two decades.

AMLO Firmly Ahead In The Polls
Mexico - Presidential Voting Intentions For Presidential Election, % of Total
Source: Oraculus - Poll of Polls, BMI

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