Sheinbaum’s Historic Inauguration as Mexico’s First Female President

By Diego Oré
MEXICO CITY (Reuters)

Claudia Sheinbaum will make history on Tuesday when she is sworn in as Mexico’s first woman president, inheriting challenges to quell violence from organized crime and reduce a hefty deficit in Latin America’s No. 2 economy.

Sheinbaum, a 62-year-old scientist and former mayor of Mexico City, will be inaugurated at a ceremony in Mexico’s Congress for a six-year term lasting until 2030.

Political watchers predict she will urgently look to calm investors following a controversial judicial reform by outgoing President Andres Manuel Lopez Obrador.

Markets will seek “a predictable and investment-friendly policy and regulatory framework,” stated Alberto Ramos, head of Goldman Sachs Latin American economic research. He noted that “disciplined management of the budget and of state-owned enterprises” would be crucial for preserving positive market sentiment and sovereign debt ratings, especially concerning the state energy firm Petroleos Mexicanos (Pemex).

The upcoming November presidential elections in the United States, Mexico’s largest trading partner, may add to market volatility, particularly if former President Donald Trump, who plans to increase tariffs on Mexican goods, returns to power.

Before Nov. 15, Sheinbaum’s government will present its first budget, expected to be closely examined for insights on her commitment to reducing the fiscal deficit to 3.5% of GDP from a projected 5.9% by year’s end.

Continuity with Change?

Lopez Obrador, in office since 2018, successfully doubled Mexico’s minimum wage, reduced poverty and unemployment, expanded social programs, and strengthened the peso, boosting his popularity and assisting in Sheinbaum’s landslide victory in the June elections.

Sheinbaum has promised “continuity with change” but inherits the largest budget deficit since the 1980s and stalled economic growth. Experts have pointed out that a tax reform is necessary to increase revenues, although Sheinbaum has indicated she does not plan a significant tax overhaul. She will instead aim to enhance the efficiency of tax collection at customs.

Economist Bernardo Keiserman from Bradesco BBI warns that Sheinbaum must achieve substantial fiscal consolidation to maintain market optimism and acknowledges that accomplishing a sizeable adjustment will be challenging amid a weakening economy.

The central bank has recently reduced its GDP growth forecast for this year to 1.5% from 2.4% and lowered its estimate for 2025 to 1.2%.

The new administration also faces financial burdens from state-owned Pemex, one of the world’s most indebted oil companies. While nearshoring has attracted investment to Mexico, Sheinbaum will need to navigate the challenges of increasing foreign direct investment alongside implementing a controversial judicial reform, which allows judges to be elected by popular vote—a move that has escalated investor fears and drawn criticism from the U.S. ambassador to Mexico for threatening the rule of law.