Energy reform will hit investor confidence in Mexico

Significance

The government will appeal the rulings, which follow action by renewables firms. With constitutional battles over energy investments already unfolding, the future of Mexico’s energy framework has been thrown into turmoil.

Impacts

• Increasing energy prices will probably push inflation above Banxico’s upper target limit of 4%.
• AMLO’s apparent disregard for international trade agreements will strain relations with the United States.
• AMLO’s pro-austerity fiscal stance could take a toll on his popularity.