Increase in crime in Mexico affects the economy: IMF

The human and economic costs of crime in Mexico have risen to historic levels, warned the International Monetary Fund (IMF), noting that (so far), 2017 has been the most violent year in Mexico, with more than 25 thousand homicides, which means a 50% increase since 2015.

Increase in crime in Mexico affects the economy
Increase in crime in Mexico affects the economy

Christian Saborowski, Chief Economist in the IMF's Western Hemisphere Department, stressed that economists often distinguish the direct and indirect costs associated with crime.

The economic activity of the country's microenterprises, more than 95% of Mexican companies that employ only up to 10 people, such as corner-family bakeries, is the most vulnerable.

It reflects that around 13% of the micro-enterprises affected by the crime canceled their commercial expansion, while almost a fifth reduced working hours.

Saborowski pointed out that there are direct costs, and pointed out that for households and combined companies, the direct costs of crime, such as preventive measures and damages, increased to a staggering 2.5% of the Gross Domestic Product (GDP). , in 2017.

However, the specialist stressed that according to the National Institute of Statistics and Geography (INEGI), which tracks the crime that affects households and businesses, the direct costs related to crime for households increased by 1.1% of GDP in 2016, to 1.65% in 2017, adding that in the case of companies in the country, said institute reported that the total amounted to 0.9% of GDP.

"The micro-enterprises affected by the crime canceled their business expansion. Even the largest companies are not safe, "he said.

He said that while crime disproportionately restricts microenterprises, it also affects larger companies.

"The state oil and gas giant of Mexico, PEMEX, is an example that shows that even large companies are not immune to criminal acts that affect operations.

"The company has reported that the number of illegal faucets in its pipelines has increased by 50% in 2017 compared to the previous year, and approximately 15 times since 2010. PEMEX estimates that only oil theft is costing the company 1.6 billion dollars per year, equivalent to approximately 0.14% of GDP, "he said.

In this context, he said that these findings emphasize the serious human and economic costs associated with crime, and also warned that they continue to weigh on Mexico's goal of higher living standards, and lower poverty and inequality.

"The magnitude of the economic costs adds to the many other reasons why the fight against crime should be a political priority in Mexico.

"Developing policies to reduce crime and implement them effectively is not an easy task. However, improving the efficiency and quality of law enforcement and judicial institutions would probably have to be a critical part of any policy package to successfully strengthen security in Mexico, "concluded IMF specialist Christian Saborowski. .