Reporting on the Mexican Cartel Drug War

Mexico economy unharmed by violence - finance minister

Tuesday, March 22, 2011 |

BBC

Mexico's problem of drug violence is serious but there is no evidence investors are being put off, Mexico's finance minister has said.

Ernesto Cordero told the BBC that the tourism sector also seemed unaffected by concerns over violence.

Mr Cordero, speaking in London, said that Mexico was set to continue its strong economic performance, with growth this year set for 4% to 5%.

The effect of rising oil prices on the US recovery is a key concern, he said.

The minister said that Mexico was facing and solving the problem of criminality, a reference to the drug-related violence that has seen high murder rates in some regions of the country.

"There is no evidence investment is not coming to Mexico or that investors are being put off because of violence," he said.

Key customer

Mr Cordero said that within this positive picture, it was clear some cities were suffering and missing out on investment which tended to relocate to other parts of Mexico.

Ernesto Cordero in London on 22 March, 2011

Mr Cordero believes the rest of Latin America is potentially a huge market for Mexico

"We are trying to help local governments, municipalities and state governments to solve the problem and also retain and attract investment," he said.

As for tourism, "we have very high rates of occupancy, so it doesn't seem affected," Mr Cordero said, adding that the focal points for violence were not areas usually visited by tourists.

Mexico's economy grew by 5.5% last year, its fastest annual rate in 10 years, according to official figures published in February.

Unlike many emerging market economies, Mexico is not suffering high inflation, running at 3.6%, down from 4.5% in 2010.

Mr Cordero said the economic growth meant Mexico had been able to recover strongly and quickly from the global economic crisis.

He admitted that the government needed to do more to broadcast Mexico's economic success.

"We lack a good strategy to communicate our achievements in the policy field. People are surprised to learn that living conditions here are better than in Brazil, for example."

Figures from the International Monetary Fund show that Mexico's GDP per capita is $14,300 (£8,700), while Brazil's is $11,300.

Rising oil prices are a concern for Mexico given the potential effects on the world economy, above all in the US.

"We need to have economic recovery in the US," Mr Cordero said.

Some 80% of Mexican exports are to the US market, down from 90% a few years ago, but Mexico's markets are still not diversified enough, Mr Cordero said.

He added that his country needed to look more to Asia and Latin America.

"Mexico is not the only Latin American country that is consolidating its middle class and creating a large market," the minister told the BBC.

Mr Cordero is a strong contender to be the presidential candidate for the National Action Party (Pan) in next year's election, according to several Mexican political analysts

Source: http://www.bbc.co.uk/news/business-12818647

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23 Borderland Beat Comments:

Anonymous said...

because mexico is a criminal enterprise anyway

Anonymous said...

LIES! THIS DOESNT EVEN PASS THE LAUGH TEST, THERE ARE ENTIRE TOWNS THAT HAVE BEEN RUINED AND ARE TOTALLY EMPTY... WILL THEY NEVER STOP WITH THE LIES?

juandos said...

Consider the following posted on March 2 of this year: Mexico has rebounded from a deep recession but an escalating drugs war, stalled economic reforms and a dysfunctional oil monopoly are a drag on Latin America's No. 2 economy, worrying the U.S. and foreign investors...

Anonymous said...

Is this guy really our Janet Napalitano in drag?? They both seem delusional.

Anonymous said...

I'm not buying this bs........I know for a fact of many, many people that have not visited Mexico since it really started getting bad (myself included)

Anonymous said...

Iv been saying all along, This war is not about drugs, but rather safety for investors who are jittery over the trillions in U.S. Debt.

'lito'brito said...

JAJAJAJAJ....yeap the tourist economy is booming especially along the border...just go to N. Guerro Tamps...they are building lodges and restuarants all over the place ...and as we all know ACA is just jumping

this wonk is of the school of "say it enough times and it becomes true"

i am really getting ready to go driving around Mexico ...do some camping and sight seeing ...especially in remote areas in a new suburban or escalade..after that i am gonna go to Monterrey and buy a house and open a business...and make sure i let everybody know i am making lots of money

dee loose yun al

Anonymous said...

Ok so who has any insight to actually knowing the economics in Mexico? I for one sell mining goods to Mexico and can say for the last three years my business down there has only gotten stronger and improved.

So maybe the local vendors in some towns have been hurt but other businesses haven't lost a beat.

Who has any other insight besides these other folks who don't do business with Mexico who can only assume.

They are talking about investors, as in manufacturing, mining etc etc not local street vendors.

I want some real insight.

Saludos,

Anonymous said...

Drug money has to be laundered some how.
It's easy to make a successful "legitimate" business when there's millions in drug money being laundered through it.

Anonymous said...

Total B S every border town from Cal to Texas,restrants,bars,shops,market,humting,everything is flat,why because of the same lying inept idiots who are supposed to keep order,they had rather get their secret $$ than have a functioning community.Even PMEX is having HELL.

Anonymous said...

Yea, I believe any official Mex gov't pronouncement even less than official US ones. Look up self-serving in the dictionary and you'll see a pic of a government bureaucrat with his fake smile and 'all is well' quotes.

'lito'brito said...

yeap those mines are good to stash all kinds of illicit cosas...bodys etc...and the same equipment you use to mine , you can use to dig tunnels...lets see,,, is one of the things you sell explosives?

and so if it is all great why do we have 15 million illegals here who have paid a lot of money and risked their lives to come here ...maybe they need to get work in that booming mining industry

you want some insight ..go there ,,live there ...after a whole you will get insight...maybe even get in the sights ..jajjaja

Buela said...

Ok...so this is true on its face, but lets dig deeper.

First and foremost is "HOT MONEY" for you all that do not invest or know the stock market...these are short term investments in places that give ridiculous interest on your money....in other words there will be a "pull out" at some point soon and Mx could fall flat.
in 2009 this was 7.9 B
in 2010 in one quarter? IN ONE QTR=45B
this is FIVE times the direct investment.
This effected everything...the peso last year at times I got almost 15 pesos per dollar on exchangepresently it is apx 11.90. This power of the peso will affect its exports and price them out of some key markets.

When the short term investors pull out an economic crisis will be created and if Mx does not offset that they will crash and burn.Under the North American Free Trade Agreement (NAFTA), the Mexican government is severely restricted in its authority to use capital controls, a policy tool many other governments are using to manage hot money flows. For example, Brazil and India have opted to restrict inflows of hot money through fiscal schemes. Also, Mexico’s economy is highly dependent on exports to the United States, a dependency that NAFTA has intensified. If hot money continues to drive up the value of the peso, these exports will be less competitive.

In addition to that; quietly to the outside world but loud and clear to Mexican citizens mexico came up with the horrible idea of taxing food and medications. Horrible on many levels and not a way to balance a budget or increase the GDP which was 5.3 with an added public debt increase of over 11%.

Anonymous said...

Lito Brito, you are an ignorant piece of work. Yes there have been mass graves etc. etc. BUT!
Let me tell you that I have lived there mi compa, I am Mexican American who has lived on both sides of the border. Sounds like you don't have any insight what so ever. You blog all day long bashing Mexico and the drug war but what are contributing for, pendejo?

I don't sell explosives but I supply heavy equipment and accesories.

For your ignorant fact there are plenty of people that do work in the mines in Mexico, it's actually one of the few well paying union jobs.
Mexico is rich with natural resources and they have capitilized on it for years, inside and outside investors from abroad.

Pinche Lito Brito, no tienes nada que decir mejor callate pendejo. There are still honest trustworthy businesses in Mexico. I have several contacts in the Mining industry that are legit and do several million dollars worth of business with them and most of their money is invested from abroad and not laundered pendejo.

Mining is huge in Mexico, Carlos Slim made 18-20 Billion over the last few years investing in mining assets. Do some research and do something positive cabron.

And while yes the local shops in border towns and food joints have taken a hit I travel to Chihuahua, Sonora, Coahulia, Nuevo Leon and life still goes on. People still do business porque vivir en temor no es vivir pendejo.

Saludos,

Anonymous said...

It's true the Mex economy is growing fast, growing faster than the US in fact, but the poor in Mexico are only poorer due to the inflation, costs of tortillas, fuel have all gone up.

My friends in DF with in the white collar jobs are all doing better and investment is up.

NOw for him to say the violence has not affected tourism or the economy at all is effin bullshit....Someone on here mentioned ACa....My friends are begging for people to come to Aca...I mean begging..This whole Habla Bien De Aca campaign to get tourists to come...EVen the Mexicans stopped going there.

Now with regards to the economy...Many companies have had to spend millions in additional security due to the violence so that has to mount to some economic suffering. Also, just yesterday we read how Pemex is losing billions due to their oil reserves producing very little more and more each year and billions due to the cartels stealing the oil!!!

This is the problem with Mexico...They are a stubbornly proud people who refuse to acknowledge the problems they have and continue to point fingers......It's as if he's saying, no problem at all...They minimize shit that is a freaking cancer spreading through their very institutions, corporations and country as a whole....They need to realize this to continue growing.

Buela said...

Of course it has effected tourism in SOME places. But the fact is in others it is up and booming. The packages are too cheap to ignore for some folks...cabo air-4 or 5 star hotel-food-booze all inclusive from LAX at 549 USD..come on, really? hard to pass up and places like Cabo are safe anyway

Anonymous said...

Anon...11:34
I agree as Mexico rich only get richer, while it's hard to identify with middle class because there basically isn't one. Either you are rich or poor. Very few well paying jobs, increasing of fuel, goods it's a hard life. I have family there so I know how hard it is for many. Some costs of goods are frankly more expensive than what we as Americans pay here. Fuel has always been more expensive there even having Pemex as a forefront company.
Although Pemex is losing billions they aren't in no way close to going under. While there are several monoployzing businesses in Mexico like Pemex, Telcel, Movil el Senor Slim many other businesses have prospered but that is because trade goes back and forth within the US and Mexico. Goods flow there and goods flow here legally in this term but Mexico's economy reflects alot on the American as well. If things are booming here then things get better there. Construction of commerical and residential areas reflects on goods needed out of Mexico with the export of commodities. I agree the business has been affected with tourism because most paisonos won't leave there town to travel to vacation, they would rather travel elswhere or not travel at all. The narco violence has it's affects and the clear startegy hasn't worked but what else can be done to make things smooth over when the war was cleary declared six years ago. Felipe Calderon has had a tough time trying to erase what was let " loose " or grown for many generations.

Anonymous said...

Buela, I appreciate your insight and comments, I learn alot, seems you know what you are talking about unlike all these other people with ignorant comments like "lito'brito" or the guy saying all of "mexico is a criminal enterprise anyway"

hasta la madre said...

Hey Buela, very informative post, but do you know if there are any signs of investors pulling their money en masse any time soon? Are you suggesting we're gonna see '94 all over again?

Buela said...

Hot Money investments are short termed usually 6-12 months. Mexico is really bound by NAFTA, so as I see it they must cultivate direct investments. They need to take a good look at China and India. duplicate what works. and do not allow the peso to become so strong it becomes destructive to global competitiveness.

Anonymous said...

For whatever reason Mexico today vs Mexico 30 yrs ago. Today look at all the new cars,well dressed people things have defenatley improved, Schools,paved roads,water systems,its the corruption that has always retarded Mexico,just think of how much $$gets skimmed off public works projects, Mexico where nepatism is a way of life.

Anonymous said...

I think this "expert" points out some things that are true and some things that are patently out-of-touch.

Tourism: Acapulco is staggering under the lack of tourism. Obviously the border towns are ghost towns (no more day tourism). Cancun has vacancy rates they have not seen in ages. So tourism is in fact down. BUT, I have friends from the northern US & Canada who see virtually nothing on the news about Mexico so think "oh, Mexico is so nice. Bad things happen everywhere, so I don't worry". And because they can go to an all-inclusive resort - flight, hotel, taxes and all you can eat and drink for $600 for a week - they think they are experiencing the real Mexico. All it will take is a few dead tourists and much of that will change.

Business: I have lived in Monterrey for 11 years and I love my adoptive city. I loved it more prior to 2006, but... I run a plant that employs 600 people, but we have seen our security expenses go from near zero to over $2 million per year. This amount does not count the payouts to kidnappers or the dramatic expansion of the corporate security department that now considers terrorist threats, cartel activity and kidnapping stats. The executives now each have at least 2 guards and we travel in armored SUVs. The parent company is seriously thinking of closing all of our plants and relocating either back to the US or to a more secure country because the additional costs are narrowing the savings.

It hasn't happened yet, but another year or two of this and we could easily see over 5000 jobs and hundreds of millions of dollars lost to the economy. And we are just one company.

So while this guy may be right for the moment, he has no feel for the undercurrent of what is coming. Eventually, companies will abandon their multi-million/billion dollar plants when the security risks are too high for too long. It takes awhile, but it will happen

Anonymous said...

if Mx is do'n so well how come all the citizens are swimming the rivr for work in America...put a suit on a man & he becomes a liar..no matter American or Mexican...777

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