miércoles, 12 de febrero de 2014

Security: the most important obstacle to Mexico's growth

According to the Banco de Mexico's January survey of private sector economists, security problems are the single most important limitation to Mexico's growth in the next six months.

Yes, but...

Each month,  the survey asks participating economists (of which I am one) to choose three factors from a list of 23 that will be the principal limitations on growth in the next six months. "Problemas de inseguridad publica" is always included on the list. It's not surprising that it headed the list in the January survey, given the Government's frontal attack on the security problems in Michoacan. Like everyone else, economists can be influenced by what's in the news. That the Government has chosen to address the challenges to state authority raised by druglords' control of parts of the state and the rise of the auto-defenses is a major policy decision.

All through 2013 (and before), problems of public security have been on the radar screen as limitations to growth. Over the last year, security has typically been in 3rd or 4th place. Until January, "weakness of the world economy" and of "weakness in foreign markets" have been considered the most important limits to growth. They have often been followed by "international financial instability". Security "beat out" those first two standards by 2 and 1 percentage points, respectively, in January. That's hardly a resounding lead. 

There's nothing new in the fact that economists from the private sector see security problems as a limitation to growth. That's been the case for some time, per the Banxico surveys. However, be careful about citing it as the most important limitation to growth on the basis of a single month's survey and the fact that it received 20% of responses instead of 19% or 18%.

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