March was defined by the dynamics surrounding the war initiated by the US and Israel against Iran. Despite suffering significant losses of leadership and numerous attacks against its military infrastructure, Iran managed to maintain steady retaliation against Israel and targets around the Persian Gulf, notably in the UAE, Kuwait, Qatar, Bahrain and Saudi Arabia, among other countries. The most impactful aspect of the war for markets has been the slowdown in shipping volumes through the Strait of Hormuz, for fear of an Iranian attack, which has pushed the cost of energy products, petrochemicals, aluminum and helium higher. The impact on emerging markets has varied by country, with several Asian economies facing the most direct near-term effects, given the greater share of products they import from the region. While the US and Iran are engaged in various forms of diplomacy, the disruption to energy markets is likely to remain a challenge until the sides reach a lasting resolution.
In Mexico, President Sheinbaum was unable to earn the support of smaller parties within the governing coalition to push forward constitutional changes that would impact the composition of Congress. These parties feared that the proposed changes would benefit Morena, Sheinbaum’s majority party, to the detriment of others. While the coalition government is likely to remain in place, Sheinbaum is expected to continue exploring reforms to enhance Morena’s electoral advantages as midterm elections approach in 2027.
April brings key EM political contests to the forefront. Elections in Hungary on April 12 will be closely watched, with Viktor Orbán’s sixteen-year run as Prime Minister in jeopardy. His Fidesz party is trailing meaningfully in the polls to TISZA (Respect and Freedom Party) and its political leader Péter Magyar. Following the removal of multiple presidents in recent years, Peru will hold general elections, also on April 12. The field of candidates running for president is crowded and lacks a clear front-runner, while the legislature is expected to remain fragmented. Assuming no presidential contender clears 50% in the first round, the top two candidates will proceed to a run-off on June 7.
