Business leaders flag upcoming election, security as top concerns in Mexico

By Aida Pelaez-Fernandez

MEXICO CITY (Reuters) – Only five months ahead of Mexico’s presidential election, a survey of business executives released on Monday revealed their main concerns center on the outcome of the vote plus longstanding worries over insecurity dragging down the economy.

The survey conducted by consultancy KPMG showed 58% of executives see the presidential race as the biggest variable for their operations, even above a potential economic slowdown.

In June, Mexican voters will choose between ruling party candidate Claudia Sheinbaum, the former Mexico City mayor who pledges continuity with the policies of outgoing leftist President Andres Manuel Lopez Obrador, and main opposition hopeful Xochitl Galvez, who pitches a more business-friendly approach.

Lopez Obrador’s popularity is seen giving the edge to Sheinbaum, who is currently favored in most polls.

Almost half of the 900 executives polled agreed that the most pressing risk for Mexican companies is a deterioration in the rule of law and worsening insecurity.

Risks associated with rule of law and insecurity moved up from fourth place in last year’s survey to first in the latest edition, KPMG’s Gerardo Rojas told reporters at a news conference.

Despite concerns over future governance, over half of participants expect Mexico’s economy to maintain its current growth rate in 2024, while 30% see it stagnating. Another 13%think the economy will enter a recession.

Last year, Mexico overtook regional heavyweight Brazil as the best destination for investors, including for mergers and acquisitions.

“We were struck by the fact that Mexico displaced Brazil in the ranking. Historically, Brazil was the preferred country,” Rojas said.

He noted that trade tensions between the United States and China have benefited Mexico with so-called nearshoring, as many firms look to relocate operations from Asia in order to be closer to U.S. supply chains.

(Reporting by Aida Pelaez-Fernandez; Editing by David Alire Garcia and Bill Berkrot)