Analysts agree that the new president's most pressing challenge will be to calm investors, who are concerned about the swift approval of a judicial reform supported by her political mentor, the outgoing president Andrés Manuel López Obrador.

Scientist Claudia Sheinbaum will take office on Tuesday as the first female president in Mexico's history for the 2024-2030 period, with the challenges of spurring meager economic growth, calming violence linked to organized crime and reducing the highest fiscal deficit since the 1980s.

But analysts agree that the most pressing challenge for Sheinbaum, 62, will be to calm investors worried about the swift passage of a judicial reform promoted by her political mentor, outgoing President Andrés Manuel López Obrador, which they have seen as a threat to democracy and the business climate.

"The main challenge for President Claudia Sheinbaum will be to reinforce market confidence and offer a predictable and investment-friendly regulatory and policy framework," said Alberto Ramos, head of Goldman Sachs' Latin American Economic Research team.

"Disciplined management of the budget and state-owned enterprises (Pemex in particular), progress on public safety and safeguarding the integrity of key institutions will be critical to preserving market confidence and sovereign debt ratings," he added.

The first months of Sheinbaum's six-year term, former mayor of Mexico City between 2018 and 2023, could be highly volatile for local financial markets due to the presidential elections in November in the United States - its neighbor and largest trading partner - when attention will shift to irregular migration, trade and security.

The market will also be closely following the presentation of the incoming government's first budget before November 15, to analyze whether it will be able to fulfill its promise of reducing the fiscal deficit to 3.5% of the Gross Domestic Product (GDP) from the 5.9% estimated for the end of this year.

CONTINUITY WITH CHANGE?

During his tenure, which began in December 2018, López Obrador doubled the minimum wage, reduced poverty and unemployment, expanded the base of social programs and oversaw a strengthening of the peso — successes that boosted his popularity and helped Sheinbaum win a landslide victory in June elections.

But beyond her promise of "continuity with change," Sheinbaum will inherit a large budget deficit and a GDP that, in real terms, expanded just 0.9% during her six-year term. According to experts, the solution for Latin America's second-largest economy is some kind of tax reform that increases fiscal revenue.

However, Sheinbaum herself has said that she does not have a "deep tax reform" in mind; on the contrary, she maintains that she will seek to reduce bureaucracy and improve the efficiency of tax collection at customs, among other proposals.

"It will have to carry out a significant fiscal consolidation if it wants to maintain the positive view that the markets have of it today," said Bernardo Keiserman, an economist at investment bank Bradesco BBI.

"We believe the government is committed to an adjustment, but achieving one of sufficient magnitude will not be an easy task. The economy is weaker and is likely to weaken further," he added.

The central bank recently cut its GDP growth forecast for this year to 1.5% from 2.4% previously and lowered its estimate for 2025 to 1.2%. In addition, the incoming administration will inherit a heavy fiscal burden from state-owned Petroleos Mexicanos (Pemex), one of the most indebted oil companies in the world.

Following the coronavirus pandemic, nearshoring - the transfer of a company's production or commercial processes to countries close to its main market to reduce costs - has placed Mexico at the center of investments.

One of the challenges for Sheinbaum will be to increase Foreign Direct Investment (FDI) while implementing the controversial constitutional reforms inherited from López Obrador, such as the election of judges by popular vote or the elimination of autonomous organizations, which have pitted Mexico against its partners in the North American trade agreement: the United States and Canada.

Both countries have raised their voices in protest, saying that the constitutional changes create uncertainty about the rule of law and the strength of government institutions. And the rating agency Moody's has warned that the judicial reform could have significant repercussions on the country's sovereign credit rating.

In the final stretch of López Obrador's government, Mexico showed an uptick in violence: clashes between organized crime groups, shootings, blockades and an increase in homicides.

But López Obrador said he was leaving with a "clear conscience and very happy" after claiming to have laid the foundations for the transformation the country needed.

"I retire with the pride and honor of having served a good, hard-working, intelligent, fraternal people, heirs to the great values of ancient Mexicans," he said last month in his final government address in the emblematic El Zócalo square in the capital.