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JPM Mexico Economic Comment 2012-03!30!819544

JPM Mexico Economic Comment 2012-03!30!819544

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March 30, 2012
Latin America Economic Research
Mexico Economic Comment:What to expect from theupcoming general elections
Mexico will hold Presidential and Congressional elections on July 1
The official campaign kick-off took place today
The centrist PRI candidate is leading the polls by a wide margin...
... but we expect a much closer race as we move towards the election
In contrast to 2006, the proposals of the three major candidates embrace fiscaldiscipline and low inflation
The outcome of this election couldspur reform optimismThis year Mexico will hold Presidential and Congressional elections
. Mexican citizens willchoose the country’s new President on July 1. On that same date, both chambers, the Lower House and the Senate will be fully renewed,while there will also be elections for governorshipsin seven states, and for municipal heads and local legislators in fifteen states (please see thetable belowtable). The official kick-off of the campaigns took place today (March 30), whileJune 27 will be the last day for candidates to perform proselytistic activities and -as it isaforementioned-, the elections will take place on Sunday July 1.
Elections in July 1, 2012
FederalState governorship and local Congress
President Chiapas*Senate Federal DistrictRepresentatives Guanajuato
Local Congress
JaliscoCampeche MorelosColima TabascoNuevo León YucatánQuerétaroSan Luis PotosíSonoraState of México
Source: IFE *Election for State Governor will be conducted on August 19.
We highlight that re-election for President is strictly forbidden in Mexico and there is noconsecutive re-election for legislators and other positions at the state level. It is also worthnoting that Mexico has a one-round voting system, and with the exception of certain legislators,the results are judged in absolute terms (
no “electoral vote”). Voting in Mexico is notcompulsory, and voting is a right for Mexican citizens to exercise either within Mexico’sterritory -in an assigned district quite close to their registered address-, or abroad, if nationalsliving off-shore pre-register. The Federal elections (President and Federal Legislators) areorganized by the Federal Electoral Institute (
), with an important participation of the general population, and are enforced by the Federal Electoral Tribunal (
). On the other hand,local electoral institutes at the state level are responsible for conducting state governorship,
March 30, 2012
municipal heads, and local legislators’elections. The newly-electedLegislators will take upoffice on September 1, while the new President will begin the 2012-2018 cycle on December 1.
The poll results
. In terms of the overall standing, the centrist PRI candidate, Enrique Peña- Nieto, is leading the pollswith 39% of the voters' preferences, followed by Josefina Vázquez-Mota, from the right-wing and incumbent PAN, with 24%, and the left-wing PRD's candidate,Andrés-Manuel López-Obrador (AMLO), with 18% (please see the chart below). It is worthnoting that pollsters are reporting two different results in the voters' preferences. The directresult, in which firms such as Consulta Mitofsky -a leading pollster-, present the actual percentages of the surveyed individuals that answered for whom they will vote for,as well asthe percentage of undecided individuals.On the other hand, the majority of pollsters present the so-called "net preferences" in whichthey assume that the undecided citizens will vote in the same proportion as the ones thatexplicitly expressed their preferences. In our view, the undecided are a quite relevant group because they could make a difference in the final result, as they represent a large share of theoverall preferences. In this context, we believe that assuming the undecided will follow the pattern of the decided ones could be somewhat misleading. As a result, we present both resultsfor Consulta Mitofsky's polls -which recognizes the undecided individuals(chart above)-, aswellas the "net preference" results for other pollsters, for comparisonpurposes (please see thetable below).
Political surveys ahead of this year's Presidential election
PollsterPRIPANPRDOtheNetpreferencesEnriquePeña-NietoJosefinaVázquez-MotaAMLOAverage45. Deviation5.
Consulta Mitofsky48.028.922.70.4Excélsior47. Universal50.528.120.11.3Ipsos36. Fórmula36.425.417.80.7Covarrubias y Asociados48.
Source: Cosulta Mitofsky. Note: All polls were conducted in March 2012.
1015202530354045Nov 10Feb 11May 11Aug 11Nov 11Feb 12
% of total
Presidential election: voter intention poll
Source: Consulta Mitofsky
March 30, 2012
Who is who in the Presidential race.
PRI's Peña-Nieto is the former Governor of the State of Mexico -which accounts for 13.5% of the country's population and for 9.4% of Mexico's GDP-,has a Law degree from
Universidad Panamericana
, and an MBA from
. On the other hand, Vázquez-Mota has been head of the Ministries of Social Development and Education, aswell as a Federal Representative. She obtained a BA in Economics from
Universidad  Iberoamericana
. It is worth noting that Vázquez-Mota is the first woman to become PAN'sPresidential candidate and, as a result, the first woman running for President in a major political party in Mexico. AMLO holds an undergraduate degree in Political Science from
andwas formerly Mexico City's Mayor. Mexico City is responsible for 17.3% of Mexico's GDPand holds 7.9% of the nation's population. We note that this is AMLO's second attempt to winthe Presidency, as he participated in 2006 election, in which he lost to President Calderón by aclose margin (less than 0.6% of the votes casted, according to official results).
Legislators will be voted too.
There are currently 500 Representatives and 128 Senators. Thecurrent composition of both chambers is depicted in the tablebelow. In both chambers there isa certain number of Legislators that are elected by direct votes. However, 200 (out of the 500)Representatives -also called "Plurinominales"-, and 64 Senators (out of 128) -also called"Primera Minoría" and "Representación proporcional"-, are elected indirectly reflecting theshare the political parties achieved in the overall votes that were casted, regardless if these parties won or not. These "plurinominales" and "primera minoría" areselected by the partyleaders.The rationale behind these legislators is to allow political parties that do not necessarily win the political position by direct votes have proper representation in legislative processes. In our view, while this was relevant in the early stages of Mexico's revamped democracy in the earlynineties (recall that the PRI ruled the country for morethan seven decades and did not lose anelection until year 2000), in the absence of re-election, the incentives for legislators are alignedto do whatever the "plurinominales" or "primera minoría" say, insteadof what their constituentsclaim for. This, in addition to the lack of working majority in both chambers, has been the mainunderlying reasons why we believe structural reforms have remained stuck.
Composition of Mexico’s legislative power 
# of Senators%Senate128100
Ruling party PAN (right wing)5039.1PRI (centrist)3225.0PRD (left wing)2318.0Green party (PVEM)86.3Movimiento Ciudadano(left wing)53.9PT (left wing)53.9No political affiliation53.9
# of Representatives%Lower House500100
PRI (centrist)23947.8Ruling party PAN (right wing)14228.4PRD (left wing)6913.8Green party (PVEM)234.6PT (left wing)132.6PANAL71.4Movimiento Ciudadano(left wing)61.2No political affiliation10.2
Source: Mexican Senate and Lower House website.

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