Sheinbaum also used her first speech as head of state to address investor concerns after the passing of a sweeping judicial reform pushed by her predecessor, Andres Manuel Lopez Obrador.
 

She reiterated that the central bank would be autonomous and told investors: “Rest assured that the investments of national and foreign shareholders will be safe in our country.” Alberto Ramos, head of Goldman Sachs Latin American economic research, said Sheinbaum will be judged on whether she can construct “a predictable and investment-friendly policy and regulatory framework.”
 

“Disciplined management of the budget and of state-owned enterprises, progress on public security, and safe-guarding the integrity of key institutions will be key to preserving market sentiment and sovereign debt ratings,” Ramos said, emphasizing the importance of heavily-indebted state oil company Pemex.
 

Sheinbaum pledged that the Mexican oil giant will look to maintain daily oil production at 1.8 million barrels, in line with current output.
 

The November presidential elections in the United States, Mexico’s largest trading partner, could add to market volatility, especially if former President Donald Trump, who has vowed to increase tariffs on Mexican goods, wins.
 

Sheinbaum’s government will present its first budget before Nov. 15, which is expected to be highly scrutinized for clues on whether she will make good on commitments to reduce the fiscal deficit to 3.5 per cent of gross domestic product from 5.9 per cent, where it is predicted to close the year.
 

In an afternoon speech in the capital’s historic Zocalo square, she offered 100 pledges, ranging from expanding public healthcare and education to building 1 million new homes, capping prices for key goods and sending Congress a package of reforms to battle gender violence and discrimination.
 

Sheinbaum said she will unveil the package on Thursday, and said it will include proposed changes to the constitution and seek to reduce impunity and protect women in a nation that records some of the world’s highest femicide rates.
 

“Our guide is the happiness and wellbeing of the people,” she said. “I pledge to you to keep making history.”
 

Continuity with change?

Lopez Obrador, whose six-year term began in late 2018, managed to double Mexico’s minimum wage, reduce poverty and unemployment, broaden the base of social programs and oversee a previous strengthening of the peso. Touting these successes boosted his popularity and helped usher Sheinbaum, his protege, to a landslide victory in the June elections.
 

Mexican presidents are limited to serving a single six-year term.
 

Sheinbaum, however, who has promised “continuity with change,” will inherit the largest budget deficit since the 1980s and lagging economic growth.
 

Experts say Mexico’s economy will require a tax reform to increase revenues, though Sheinbaum has for now ruled out a sweeping tax overhaul.
 

Instead, she has said she will pursue other options, including improving the efficiency of tax collection at customs.
 

Sheinbaum “will have to deliver an important fiscal consolidation if she wants to keep the positive view that markets have today towards her,” said Bernardo Keiserman, an economist at investment bank Bradesco BBI.
 

“We believe the government is committed to an adjustment, but delivering one sizable enough is not going to be an easy feat. The economy is weaker and likely weakening further,” said Keiserman.
 

Recently, the central bank cut its GDP growth forecast for this year to 1.5 per cent from the previous 2.4 per cent and lowered its estimate for 2025 to 1.2 per cent.
 

Nearshoring, the trend of companies moving production closer to their main market, has helped Mexico attract investment, but Sheinbaum will face a challenge to increase foreign investment while implementing the judicial reform.
 

The judicial reform, under which judges will be elected by popular vote, has scared investors and drawn criticism from the U.S. ambassador to Mexico, who said it threatened the rule of law.
 

First Published: Oct 02 2024 | 9:37 AM IST