Category Archives: Economy

Report says violence cost Mexico 18% of GDP last year

Members of a search group carry the coffin of Pedro Huesca as they walk to a cemetery in Veracruz, Mexico, on March 8. Huesca, a police detective, disappeared in 2013 and was found in a mass grave. His remains were among more than 250 skulls found over the past several months in what appears to be a drug cartel mass burial ground on the outskirts of the city of Veracruz, prosecutors said. (Felix Marquez/AP)
Members of a search group carry the coffin of Pedro Huesca as they walk to a cemetery in Veracruz, Mexico, on March 8. Huesca, a police detective, disappeared in 2013 and was found in a mass grave. His remains were among more than 250 skulls found over the past several months in what appears to be a drug cartel mass burial ground on the outskirts of the city of Veracruz, prosecutors said. (Felix Marquez/AP)

EFE

Violence cost Mexico the equivalent of 18 percent of the gross domestic product in 2016, a year when the homicide rate rose, the 2017 Mexico Peace Index report said Tuesday.

The cost of the violence amounted to 25,000 pesos ($1,335) per person last year, Mexican Institute for the Economy and Peace coordinator Patricia de Obeso told EFE.

The violence is “a tax on the country’s security” that all citizens pay and that comes to more than a month of pay for the average Mexican worker, De Obeso said.

The cost is even higher in states like Colima, where it came to 66,500 pesos ($3,555) and Guerrero, where it totaled 53,600 pesos ($2,865) per capita, the researcher said.

The report’s authors factored direct costs, such as government spending on the armed forces and business spending on security, and indirect costs, including the effect of crime on public perceptions and the loss of a breadwinner for a family.

Society must decide “if the investment we’ve made in the past 10 years in directly fighting drug trafficking … in containing violence, has really had an impact” or whether citizens must ask themselves “what we should be investing in to improve the level of peace,” De Obeso said.

http://www.foxnews.com/world/2017/04/04/violence-cost-mexico-18-its-gdp-last-year-report-says.html

U.S. Fed action deals blow in Mexico

NYT – Like millions of other people from Southeast Asia to Africa to Latin America, Mexicans are absorbing the consequences of a major shift playing out in the global economy. As the Fed lifted rates on Wednesday, it added momentum to a steady stream of money that has been abandoning emerging markets and flowing toward American shores.

https://www.nytimes.com/2017/03/16/business/federal-reserve-interest-rates-china-mexico.html

How a weakened Mexico could hurt U.S.

Five Thirty Eight – President Trump has threatened to dismantle NAFTA, to build a border wall and to slap hefty tariffs on Mexican imports, all moves that could hobble Mexico’s economy. While the Trump administration might argue that these policies are more about “Making America Great Again” than hurting Mexico, there is reason for concern that they might hurt the U.S. One risk is that the policies themselves could damage the American economy, for example, through higher consumer prices and reduced trade.

https://fivethirtyeight.com/features/how-a-weakened-mexican-economy-could-threaten-u-s-security/

Chinese wages are higher than Mexico, Brazil

China Economic Review – Average wages in China’s manufacturing sector have soared above those in countries such as Brazil and Mexico. Average hourly wages in China’s manufacturing sector trebled between 2005 and 2016 to $3.60, according to Euromonitor, while during the same period manufacturing wages fell from $2.90 an hour to $2.70 in Brazil, from $2.20 to $2.10 in Mexico, and from $4.30 to $3.60 in South Africa.

http:o//www.chinaeconomicreview.com/chinese-wages-higher-brazil-mexico

Yanking $320 million in aid to Mexico could backfire

USAToday – The United States directs an average of $320 million worth of aid a year to Mexico for various programs, all of which appear to be targets for President Trump as he looks for ways to pay for the proposed border wall with our southern neighbor. But specialists say the aid won’t make for much of a bargaining chip as he tries to goad Mexico into footing the bill for the wall, and in fact, yanking the aid could backfire entirely.

http://www.usatoday.com/story/news/politics/2017/01/26/us-aid-320-million-mexico-wall-trump-specialists-backfire/97103024/

Mexico makes new friends at Davos

BBC – It’s not every day you see a Mariachi band dressed in full regalia at an Alpine ski lodge. But Mexico Night at Davos is no ordinary event. An evening of tapas and tequila – this annual affair is organised by the government’s international trade body, ProMexico, to promote the country’s business interests at the World Economic Forum, and schmooze potential investors to the sound of “Besame Mucho”.

http://www.bbc.com/news/business-38677103

Mexico lures undeclared cash with tax plan

Reuters – Mexico said it will offer holders of undeclared capital abroad tax incentives to bring it home in a bid to lure some $10 billion in investment and steel itself against potential shocks from the incoming Trump administration. The government said it will offer an 8 percent repatriation tax on those funds returning to Mexico in six months, provided they go into investments including fixed assets and property for at least two years.

http://www.reuters.com/article/us-mexico-tax-idUSKBN1512WA

Mexico’s Trump “contingency plan” isn’t working

CNN – Mexico’s “contingency plan” to protect its economy from the “hurricane” effect of Donald Trump’s electoral victory isn’t working. On Thursday, Mexico’s central bank tried to prop up its battered currency, the peso, by selling dollars to international investors. It’s the latest move by Mexico to stop the peso’s bleeding from Trump’s threats to use tariffs, build a wall and tear up a trade deal.

http://money.cnn.com/2017/01/05/news/economy/mexico-peso-trump-contigency-plan/

Wal-Mex, Liverpool likely hit hardest by gas hike

Bloomberg – Mexican consumer companies from Wal-Mart to Liverpool SAB might see sales flag as the country raises gasoline prices by as much as 20 percent in January. Retailers might be the most affected by the jump in prices, which risks eroding consumer sentiment and purchasing power amid a weakening peso that has already fueled concern about inflation. Supermarket operators Chedraui and Organizacion Soriana might also take a hit as the cost of gasoline takes a bigger portion of consumers’ budgets.

https://www.bloomberg.com/news/articles/2017-01-03/mexico-gasoline-hikes-seen-curbing-sales-at-walmex-liverpool

Minimum wage rises almost 10 percent

WSJ – Mexico’s minimum wage rose almost 10% on Jan. 1, in a jolt to the system meant to stoke the poorest workers’ buying power, which has been eroded by recessions and past bouts of high inflation. But the prospect of higher earnings is doing little to dent pessimism among consumers, who head into 2017 facing rising fuel costs, higher interest rates and a weakening peso that closed 2016 near record lows against the U.S. dollar.

http://www.wsj.com/articles/mexicos-minimum-wage-set-to-rise-nearly-10-1483185607