COMMENT: Head in the Sand

Apr 1, 2011

There’s a war going on in the second biggest LatAm economy, but no one in its capital seems particularly bothered.

It’s easy to shoot the messenger – the press does sometimes exaggerate to make a point – but Mexico may well be worse than many bankers and investors can stand.

Even if you believe the battle is confined to drug dealers and their competitors, it is hard to dispute the numbers. More than 35,000 Mexicans have died in drug-related violence since December 2006, almost half killed just last year. On a per capita basis, that is equivalent to almost 100,000 US citizens dying in the last four years.

The negative data are not all body count. According to Banorte, drug-related violence lops 1%-2% off the country’s potential annual GDP expansion rate, versus a projected 4%-5% this year.

That number may seem low, but it’s the difference...

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