The Mexican Peso Fundamental Forecast was recently released by the Economic Commission of Mexico and shows a very interesting result. Based on Presidential election predictions for President of Mexico, it predicts that Mexico will move to the right after the election, which will mean a weaker currency and a stronger US dollar.
This is very interesting, and not just because Mexico is going to have a presidential election. There is a lot of history between the United States and Mexico, and there is some speculation on whether or not the United States will start buying more of Mexico’s oil, if for no other reason then to reduce their oil import bill. If the United States does this, and it also gets into trade wars with China and India, which would hurt the Chinese economy a great deal, the effects could be very negative. The economy is already suffering from the slow recovery from the last economic crisis, and if you don’t reduce your import bill, then you’re going to see more problems.
The economic commission notes that, based on past elections, the parties that are currently running for office are predicted to take power in Mexico. Although the current president is a reformist, they expect him to come into office, and the economic commission expects that he will pursue a pro-market policy and reduce inflation as well as taxes on exports, thereby creating a strong economy.
So, it’s quite possible that Mexico could end up moving towards the right politically, in order to reduce their dependency on the United States. But, it’s a little bit of a stretch to think that the United States could buy Mexico’s oil and use it as an economic weapon against China and India.
So, it makes sense to use more of the money we’re spending on imports on things that actually benefit us. Instead of using money on oil, let’s spend it on improving our infrastructure in the United States. Or, rather, let’s make better transportation systems between our two countries, and let’s get more of our people out of the United States in order to bring our goods over to Mexico and vice versa. I mean, we’re a part of the USA – it’s really the only free trade agreement in the world has, and a lot of us live by it every day.
I mean, it’s interesting to see the political movement in Mexico, but let’s not go all the way to the right and start buying the oil from the United States. States now.
As long as the election goes on, I doubt the Mexican economy will follow any trends at all and stay on the left side of the political spectrum, which means that the economic situation for Mexico will not be affected much, although this should help the US economy. This is because the Mexican peso will remain on a strong position and there will be less of an effect from the weaker dollar.
It is possible that Mexico will move leftward following the election, but not likely. Although if the US decides to sell a lot of oil to Mexico, and they are already dependent on American oil imports, that may also affect the US economy.
So, I think it’s a better idea to look at how much we are paying each year to import oil from our neighbour and whether or not the economy will be affected or influenced by the US economic problems, rather than rely on whether or not a US president is re-elected. There are a number of other economic indicators that may be affected by the election in a bad way, and they need to be looked at in tandem with the Mexican elections.
Anyway, in the meantime, let’s look at the fundamentals, and try and predict what happens. in the future. It seems to me that a new president will soon be elected, and the next few years will be very interesting indeed, and, depending on who wins, it looks like there will be a dramatic change of course.
Please consider all this and think on it. Consider this in 2020.