Anger Management and Gun Control? New Ways to Reduce Violence in Latin America

3/29/16 Americas Quarterly

By Viridiana Rios, Mexico Institute Global Fellow

Reducing violence is not about controlling violent neighborhoods or even about controlling violent people. It is about inducing people to control themselves. That’s it. The best policing comes when no police are required.

The question is how to achieve this in Latin America, the most violent region in the world and home to countries like El Salvador, Honduras and Venezuela, each with homicide rates similar to war zones.

The answer may be unsettling. Many instances of large decreases in homicide rates in Latin America can be traced not to large-scale judicial or police reforms, but to changes in the behavior of gang members as a result of truces with their rivals. Homicides go down when rival drug gangs, in an effort to improve their business conditions, agree to reduce violence.

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Mexican economic growth hits five-month high in January

3/30/16 Reuters

mexican pesosMexico’s economy grew by 0.6 percent in January from December in seasonally adjusted terms, the fastest pace in five months, figures from the national statistics agency showed on Tuesday.

Growth was driven by a pickup in industrial activity, which advanced by 1.2 percent from the previous month, while the service sector expanded by 0.2 percent, the figures showed.

Compared with the same month a year earlier, Latin America’s second biggest economy grew by 2.3 percent, in unadjusted terms. That was a tenth of a point faster than the same month in 2015.

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Mexico’s Busiest M&A Suitor Has a Billion Euros for Fresh Deals

3/22/16 Bloomberg 

Coca-Cola_Femsa_LogoFomento Economico Mexicano SAB bought more companies than any other in Mexico last year while expanding its burgeoning pharmacy business. Now it’s got a billion euros ($1.1 billion) of fresh ammunition.

That’s likely to translate into new acquisitions as the company looks to replicate its success in building Latin America’s largest convenience-store chain and biggest Coca-Cola bottler, according to Corp. Actinver SAB. One possible target: some of Mexico’s 11,000 gas stations. Femsa’s already adding service stations and the industry is on the verge of transformation since the nation junked a state oil monopoly dating back to 1938.

Femsa and its bottling unit, Coca-Cola Femsa SAB, have completed 19 deals worth a total $6.2 billion in the last five years, the most in Latin America among convenience-store, pharmacy or non-alcoholic beverage companies. Femsa’s sale of euro-denominated debt last week reloads the war chest after it bought drug-store chains last year, including Chile’s Farmacias Cruz Verde SA.

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Mexican economy slows in fourth quarter as industry sinks

2/24/16 Reuters

pemex2Mexican growth slowed more than expected in the fourth quarter as industry contracted by the most in over two years despite steady services expansion, data showed on Tuesday.

The economy MXGDPQ=ECI grew by about 0.5 percent from the prior quarter, below the 0.8 percent rate in the third quarter and expectations of 0.6 percent from analysts in a Reuters poll.

The industrial sector, which has been hit by sinking oil prices and production at state oil giant Pemex [PEMX.UL], fell 0.4 percent compared to the third quarter, its biggest drop since the second quarter of 2013.

Services, which buoyed growth last year, grew by 0.9 percent, slightly below the 1 percent pace of expansion in the third quarter.

Latin America’s No. 2 economy suffered last year from uneven U.S. demand for its exports and recent weakness in U.S. factory output could further drag on Mexico.

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energy - oil pumps

Why Lower Oil Prices Don’t Hurt Mexico as Much as They Used To

2/23/16 Bloomberg

Oil Rig 2 by Flickr user tsuda

The tumble in global oil prices has sent Mexico’s currency to a record low and forced the nation to cut spending and raise interest rates. Yet for all the focus on crude, Latin America’s second-largest economy is actually less dependent on oil revenue than at any time in the past decade.

The chart below shows the percentage of the federal budget that comes from oil sales. While they’ve traditionally funded more than one third of the government’s spending, that contribution dropped to less than 20 percent last year.

You might think the decrease in oil’s contribution is due mainly to lower prices and production, but the data show otherwise. The increase in non-oil tax revenue last year exceeded the drop in oil revenue by 174 billion pesos ($9.6 billion), or 4 percent of total revenue, showing that the higher non-oil intake was a bigger factor than falling crude. Other sources of revenue, like income from government services and state-owned companies other than oil monopoly Pemex, contribute another 25 percent to the total federal intake.

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Economic Power In Latin America Shifting From Brazil To Mexico

202857618_223d565208_zForbes 10/9/2015

Over the last year three key factors have weighed heavily on Latin American economies: The end of the U.S. Fed’s quantitative easing, which has brought about less favorable international funding conditions;  the decline in commodity prices, which has depressed LatAm export revenues, and the Chinese economic slowdown, which also has hit commodity-exporting countries in the region.  As a result, economic growth this year has been a huge disappointment.  In January, the consensus forecast was for GDP growth of about 3%, but now expectations have fallen dramatically to a 0.4%contraction.

As a result of the appalling situation in Brazil, economic power in the region has shifted rapidly to Mexico, the second biggest economy in LatAm. Mexico’s growth has been hampered by the crash in oil prices but the economy is growing, by around 2% year-over-year, and the economic outlook is positive.  Solid domestic economic fundamentals, and my expectation of a resilient and improving U.S. economy over the next year, should help push Mexican growth towards 2.5%.

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Global economic slowdown continues to weaken LatAm economies

8/10/15 Daily Times

latin_americaMEXICO CITY: Global economic slowdown and weak economic recovery in the United States continue to threaten Latin American countries, raising the risks of capital flight and currency devaluation.According to the Economic Survey of Latin America and the Caribbean 2015 published recently by the Economic Commission for Latin America and the Caribbean (ECLAC), the region’s currencies have tended to weaken against the US dollar over the last year. The ECLAC attributed this depression to the withdrawal or slowing down of stimulus programs, the fall in prices of basic goods, the lower availability of capital in international markets, and the overall regional economic slowdown. “We cannot see the light at the end of the tunnel,”Alicia Giron, a researcher at the Institute of Economic Investigations of the National Autonomous University of Mexico, told Xinhua.

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