Mexico’s presidential election race is starting to take shape, with Finance Minister José Antonio Meade this month stepping down from his post in order to run on the ticket of the ruling PRI party. While the other main parties in Mexico have yet to declare candidates, the early front-runner in July’s vote is the left-wing firebrand Andrés Manuel López Obrador (AMLO). A victory for AMLO would unsettle markets and could weigh on Mexico’s long-run growth prospects by deterring investment. But we think the prevailing view that an AMLO victory would be uniformly bad for Mexico’s economy overlooks the possibility that looser fiscal policy might actually boost growth in the near-term.
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