On Sunday, Mexico held elections for the presidency and both houses of Congress. On Monday morning, the vote tally suggests a landslide victory for Claudia Sheinbaum, who will be Mexico’s first female president.

While outgoing President Andrés Manuel López Obrador leaves behind a relatively vibrant economy, the president-elect faces economic headwinds — particularly in addressing a budget deficit and spending on social programs.

To hear more about what Mexico’s economy could look like under a Sheinbaum administration, “Marketplace Morning Report” host David Brancaccio spoke with Pamela Starr, a professor of international relations and the practice of political science at the University of Southern California.

David Brancaccio: It looks like Sheinbaum and her party will have a lot of power — supermajorities in both houses of Mexico’s Congress. But I also see the value of the Mexican currency, the peso, has fallen on this news, and I’m seeing nervous quotes from business analysts. Are you thinking the business establishment sees more risk moving forward?

Pamela Starr: I think there’s no doubt that they’re seeing more risk moving forward. The conventional wisdom prior to the election was that Sheinbaum was going to win a comfortable majority, but she would not win the two-thirds majority in both houses of the Congress that allows her to pretty much change the constitution at will. And there’s a lot of concern whether or not she’ll be her own person as president, to what extent will the outgoing president, López Obrador, control her. And that combination raises a lot of concerns about whether or not she will be more pragmatic than her predecessor, which was sort of what people were thinking in advance of the election.

Brancaccio: Now, she was at pains to say that she’ll “respect business freedom” and keep the door open for “private national and foreign investment” and that her government will be fiscally responsible. I mean, it says something that she thought to even say this.

Starr: You know, both she and her predecessor understand that having a good relationship with the private sector is essential for them to achieve their social welfare goals. Most of what they have done costs money, and most of Mexico’s tax revenue, most of the governmental revenue now comes from taxes. And that means you have to have a growing economy.

Brancaccio: And in just the last year, 2023, Mexico overtook China to become the United States’ biggest trading partner with the USMCA trade deal. Sheinbaum’s administration would play to, rather than push back against, that relationship.

Starr: Absolutely. The Sheinbaum administration recognizes that, again, a good portion of economic growth depends on the economic relationship with the United States. They were fans of the USMCA. They’re more likely to receive the foreign investment that they need to keep the economy growing and growing strong, and to take advantage of nearshoring, which is one of Sheinbaum’s stated economic objectives.

Brancaccio: Nearshoring — bringing in supply lines from far flung places in the world?

Starr: Exactly. The idea is to hopefully become the new China in the Western Hemisphere. I’m overstating it slightly. But the trade dispute between the United States and China is leading a lot of companies to rethink the political risk associated with having so much of their supply chain based in China. So they’re looking to diversify.

Brancaccio: Now, we should go back to something that you had said: Mexico and spending on social programs. Mexico is facing its biggest budget deficit since — I think — the 1980s, been spending on infrastructure and social programs. That’ll be something that the new administration has to wrestle with with all of its surprising new power.

Starr: The social programs are the heart and soul of what they call the Fourth Transformation of Mexico, designed to lift up the poor that they feel have been left behind in the last 30 years of market-friendly economic policies. That being said, I believe their policies will be largely business-friendly. Again, because they need the tax revenue in order to support these social programs, which are extraordinarily expensive. I think in the near term, the focus will be on reducing the fiscal deficit. They really don’t want to cut spending, the fiscal situation is difficult. The budget is very austere already, so there’s really nowhere to cut in the budget. And therefore, they’re going to need to find new sources of revenue.