Introduction
Washington, D.C. – According to Gabriel Casillas, the Chief Economist for Latin America at Barclays, global investors are currently more concerned about the trade agreement with the United States and Canada than Mexico’s internal issues, including the controversial judicial reform.
Trade Agreement as the Primary Focus
Casillas explained that, at this point in the year, investors have seen the trade agreement act as an umbrella amidst tariffs and are now more focused on the upcoming discussions starting in July than any other internal matters.
Judicial Reform Criticized but Not Expected to Impact Economy Short-Term
Although Casillas acknowledged that the judicial reform is “very bad,” he warned that it will not have an immediate economic impact. Barclays maintains a positive growth expectation for Mexico, which has remained unchanged for at least seven months, currently at 0.7% before tariffs and recently revised down to 1.7% from 2% for 2026 due to the delayed review of the free trade agreement with the US and Canada.
Economic Stability Amidst Changes
Unlike previous administrations, this new government did not experience any significant economic events or cabinet changes that typically subtract 2.5 points from GDP growth in the first year. This stability, combined with the lack of major events or changes, prevented investors from anticipating a more substantial economic growth deterioration.
Fiscal Consolidation
Casillas highlighted that the government’s commitment to reducing public deficit, particularly under Claudia Sheinbaum, had a more significant impact starting late in 2023. This fiscal management and the beginning of consolidation have pleased investors, according to Barclays.
Pemex’s Financial Management
From Barclays’ perspective, the financial management of Pemex has been well-received by global investors. The support in debt, including the purchase of $11 billion worth of Pemex bonds and Banobras’ assistance with $12 billion for this year and next, has been crucial. Additionally, Pemex received $5.4 billion for debt obligations this year and $14 billion for the following year. These measures, along with innovative financial strategies like precapitalization notes, have been positively viewed.
However, concerns remain about Pemex’s refining sector, which may require another bailout by 2027.
Sheinbaum’s Negotiation Skills
Casillas praised President Sheinbaum’s approach to the trade agreement discussions with the United States, emphasizing that well-aligned incentives have contributed to this positive management of the commercial relationship.
Sheinbaum’s firm stance against organized crime, a policy she maintained as Mexico City’s head of government and now as president, has garnered support from investors. Having the United States’ backing in combating organized crime strengthens Mexico’s position, as both countries collaborate to tackle this issue.
Key Questions and Answers
- What are investors most concerned about regarding Mexico? Investors are more concerned about the trade agreement with the US and Canada than Mexico’s internal issues, including the judicial reform.
- How has the judicial reform been evaluated by Barclays? Despite being described as “very bad,” Barclays does not expect an immediate economic impact from the judicial reform.
- What factors contribute to Mexico’s economic stability? The lack of significant economic events or cabinet changes, along with fiscal consolidation and Pemex’s financial management, have contributed to Mexico’s economic stability.
- How has President Sheinbaum’s approach to the trade agreement been received by investors? Investors approve of Sheinbaum’s firm stance and the well-aligned incentives in the trade agreement discussions with the United States.
