Mexico economy unharmed by violence - finance minister

BBC News, 22 March 2011

Related Stories

• Mexican growth hits 10-year high
• Latin America sees uncertain 2011

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

Mexico needs to find more markets for
its goods, Mr Cordero 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.

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.

Related Article:

Mexico: Attorney general Arturo Chavez resigns