Mexico And Turkey Election Primers Now Available
In Mexico, our core view is for the ruling Institutional Revolutionary Party (Partido Revolucionario Institucional - PRI) to retain its dominant status in the lower house after the mid-term elections. The entire 500-member federal lower house, in which the PRI holds 214 seats, is up for election. The PRI, combined with its traditional allies, the Ecologist Green Party of Mexico (Partido Verde Ecologista de Mexico - PVEM) and the New Alliance Party (Partido Nueva Alianza - PANAL), holds a narrow majority with 251 seats, and there is a strong likelihood that the majority will be maintained after the mid-terms.
However, policymaking will be more fragmented during the second half of President Enrique Pena Nieto's six-year term (2012-2018), as the main opposition parties, the centre-right National Action Party (Partido Accion Nacional - PAN) and the left-wing Party of the Democratic Revolution (Partido de la Revolucion Democratica - PRD), will shift to a more combative rhetoric against the PRI to build popular support ahead of the next presidential election in 2018.
In addition, the PRI does not hold a majority in the senate, and with elections for the upper house not due until 2018, PRI-led initiatives will face significant legislative challenges. As a result, we do not expect major reforms during the last three years of Pena Nieto's administration. Even in the event of a strong showing by either the PAN or PRD, friction among political parties, combined with the lack of a majority in the senate by a single party, will keep the reform outlook dimmed.
In Turkey, the ruling Justice and Development Party (AKP), in power since 2002, will remain the largest party in parliament and the dominant force in the country's politics following the general election on June 7.
However, the size of the AKP's majority is of crucial importance, and major uncertainties will emerge regardless of the outcome. Our core view, which is also the most market-friendly outcome, is for the AKP to maintain its parliamentary majority but fall short of the supermajority needed to unilaterally amend the constitution and implement the empowered presidency long sought after by incumbent President (and former premier) Recep Tayyip Erdogan. This outcome would avoid the instability of coalition governance, while diminishing the risk of a continued slide towards one-man authoritarianism. At the same time, it would boost the chances of structural reform, orthodox economic policy, and external rebalancing.