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Mexico Says Drug Violence Dents Economy
 Luis Rojas - Reuters
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September 02, 2010
Mexico City - Raging drug gang violence is likely weighing on Mexico's economy as countries with crime problems can see 1.2 percentage points sliced off their GDP growth, the country's finance minister said this week.
"It has an impact for the government and for companies," Finance Minister Ernesto Cordero said at a news conference. "It is bound to have an impact in terms of additional costs for companies and this is why it is so important to fight organized crime in Mexico in a more effective and timely way."
Drug murders have soared since President Felipe Calderon declared war on cartels on taking power in December 2006.
Turf wars, battles with security forces and targeted killings have left 28,000 people dead since then, and 2010 has seen a spurt in slayings including shootings in bars and the murders of town mayors and a gubernatorial candidate.
A growing worry for foreign investors, the U.S. government and foreign tourists, the death toll is worsening as Mexico is also struggling to get its economy back up to speed after the global economic crisis knocked it into a severe recession.
"I would quantify (the impact) in general terms," Cordero said. "Where there are security problems, where there are complications in implementing the law, there has been an impact on the growth rate of GDP by about 1.2 points of GDP."
Cordero reiterated that Mexico's economy is expected to grow 4 percent to 5 percent this year, not enough to make up for a 6.5 percent contraction in 2009.
Some analysts say the drug war may prompt investors to put projects on hold or eventually weigh on Mexico's currency.
In early 2009, Central Bank Governor Agustin Carstens, who was then finance minister, said Mexico's economy could grow by an extra percentage point if the country could resolve its security issues.
(Writing by Catherine Bremer, Editing by Sandra Maler)
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