Does Mexico's New Government Pose a Risk for Investors?

In the weeks before Mexico’s election, cartel hit-men dumped dozens of bodies in several cities and leftist politicians warned that the country’s old-school political elite might resort to electoral fraud to win the July 1 ballot count. Still, despite reports of escalating drug cartel violence in many parts of the country, political risk consultancy The Eurasia Group did not include Mexico in its list of TOP RISKS for 2012…. Peña Nieto and his team are expected to push forward with many of Calderón’s policies. Mexico, which is sometimes flippantly called a “failed state” by observers looking at drug cartel activity and organized crime, is likely to see a smooth transition from the PAN government to the incoming Peña Nieto regime. Over the next year, Mexico is likely to continue its impressive upward growth trajectory.  The new government will also try to improve security and reduce crime.

In a recent News Analysis article for The Americas Society / Council of the Americas (AS/COA) I explained “trade between Mexico and the United States increased by 17 percent in 2011, reaching a never-before-seen level of $461 billion.”  This was part of the reason why Mexico’s economy grew by 3.9 percent in 2011….

As I explained in a recent Mexico Update for AS/COA, in a recent Spanish-language radio interview, security analyst Eduardo Guerrero said that “Calderón ends his six-year term in a very sad way for him, and in a very tragic and worrisome way for the country, with very high homicide rates and with record rates of extortion and kidnapping.”

“It seems to me the Calderón administration was very haughty, and very deaf to the calls to adjust the strategy,” Guerrero added.

In the end, Calderon’s legacy is likely to be defined by how many of his policies are carried over by the next administration….

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