ASSESSMENTS

Brazil and Mexico: New Year, Different Directions

Jan 4, 2019 | 16:19 GMT

Mexican President Andres Manuel Lopez Obrador answers questions during a news conference in Mexico City on Dec. 14, 2018.

Mexican President Andres Manuel Lopez Obrador answers questions during a news conference in Mexico City on Dec. 14. His government's populist agenda could increase risks for investors.

(ALFREDO ESTRELLA/AFP/Getty Images)

Highlights

  • Mexico's new government will try to amend the constitution and allow more referendums. These moves could disrupt energy and public works projects. 
  • In the case of Mexican energy projects, a hostile federal government could intensify the threat to those investments. 
  • In Brazil, the new government's policies will inflame the political left and lead to mass protests in major cities. As a result, some business workers could face violence, especially on indigenous lands.

In 2018, populist candidates in Latin America's two largest countries rode a wave of public disillusionment to the presidency. During 2019, new opportunities and risks will open up for investors as these new leaders attempt to deliver on their campaign promises. In Mexico, leftist President Andres Manuel Lopez Obrador will try to right what he perceives to be historical wrongs by pushing for greater resource nationalism and by giving voters more power over government affairs and public works. These moves could create obstacles that end up alienating investors. In Brazil, President Jair Bolsonaro will move to give agribusiness and mining greater leeway on off-limits indigenous lands. But this shift in policy, compounded by tighter social spending, will drive unrest against his administration, and investors could get caught up in the backlash....

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