Despite the debilitating effects of the escalating violence between
Mexico's drug gangs, Mexico's economy expanded for the first time
in more than a year, and the its exchange traded fund (
) may continue to improve as trade increases between the United
States and Mexico.
Mexico's GDP expanded by 4.3% in the first quarter
year-over-year as exports to the United States increase,
report Jens Erik Gould and Jonathan J. Levin for
. Manufacturing rose by 9.9% in the first quarter year-over-year,
and services increased by 3.8%. Industrial production grew 7.6%,
with production of vehicles jumping 69.6% in the month of April
year-over-year. The Central Bank estimates that the economy will
grow by as much as 5% this year. [
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While those numbers are good, drug violence could keep them from
being much better.
Gabriel Casillas, chief economist at JPMorgan Chase & Co. in
Mexico City, believes that Mexico is losing 1.5% growth each year
due to drug-related violence. Finance Minister Ernesto Cordero
believes that violence tied to the drug cartel cut 1% from economic
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In a visit to the White House, President Felipe Calderón
insisted that America's demand for illegal drugs is the major
source of the fighting and urged Congress to ban the sale of
assault weapons that are being shipped back into Mexico.
Relations between the United States and Mexico have often flared
up over issues like American protectionism, human-rights abuses by
Mexico's army, drug violence over the border and the flow of guns
and cash southward,
. But President Calderón says the new law approved in Arizona last
month, which requires state police to check immigration status of
any "suspicious" individuals, marks a new nadir.
Back in Mexico, Calderón's party lost some ground in the
mid-terms last July and will have to answer to voters again in
local elections this summer. It is unlikely that he will obtain the
big policy reforms needed to address Mexico's economic and security
troubles. Furthermore, the fighting between the drug cartels is
intensifying, with a high-profile suspected abduction of political
figure Mr. Fernández de Cevallos, and the government's insistence
that things are getting better has fallen on deaf ears.
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Max Chen contributed to this article.