MEXICO CITY: Ratings agency Moody’s warned Tuesday that violent crime was hurting Mexican businesses, saying the crucial oil and tourism industries were particularly vulnerable.
“Increasing insecurity, robbery and travel warnings hurt Mexican companies’ top lines and profitability, and will particularly weaken revenue and margins over the next 12-18 months for the oil industry and hotels and resorts,” said Moody’s vice president Alonso Sanchez in a statement, reports AFP.Mexico, Latin America’s second-largest economy after Brazil, is struggling to deal with a more than decade-long surge in violent crime fueled by powerful drug cartels.
Since the government controversially deployed the army to the streets to fight organized crime in 2006, the country has registered nearly 250,000 murders — including a record 33,334 last year — as fragmented cartels wage war on the authorities and each other.
Moody’s said in its report that insecurity-related costs also posed risks in the food, retail and mining industries.
It is the latest tough assessment on Mexico from the big ratings agencies since leftist President Andres Manuel Lopez Obrador took office in December.
Standard & Poor’s recently downgraded the country’s outlook to “negative,” along with that of struggling state oil company Pemex. And Fitch downgraded Pemex by two notches in January, triggering investor jitters and a drop in the peso.
Lopez Obrador has dismissed the ratings agencies as “charlatans,” and launched a new attack on Tuesday, saying they turned a blind eye to corruption under previous “neoliberal” governments.“The ratings agencies remained silent the entire time that corruption reigned (in Mexico), they gave us a perfect 10,” he told a news conference.
Lopez Obrador, a populist widely known as “AMLO,” remains broadly popular as he approaches 100 days in office this Sunday. But he has spooked the business community with talk of overhauling Mexico’s economic model to address entrenched poverty and corruption.