Guerrero Has An Image Problem (10/8/2016)

European, Canadian and US investors run for cover as whispers of change within the state government are heard in Chilpancingo. Corporate media scrutiny has led many foreign firms to run for cover.

From a peak 700 million in June 2013 to 22 million last quarter, Guerrero's ability to hustle foreign investors is proving less fruitful. (10/8/2016) Sources: Secretaria de Economia Image: Bloomberg LP

La Cartita -- According to the 'Secretaria de Economia' (México's Economics Ministry), Guerrero's Foreign Direct Investment (FDI) has been slashed in half. The first quarter of 2016 saw FDI at 48.7 million dollars (more than 2 billion pesos). Foreign investors spot instability, corruption and a general lack of competence when it comes to ensuring a stable economic environment - they want out. For the second quarter of 2016, 21.8 million US dollars were invested - less than half. Now, 21.8 million USD is still quite a lot of money in México (close to 1 billion pesos with inflation largely stable, which means the dollar buys even more things). However, the recent mainstream press scrutiny could suggest a demand in changes related to governance in the region. Whispers abound that Guerrero will have a new cabinet, but local observors do not believe much will change.

Gold, México's equivalent to Africa's tragedy inducing 'Blood Diamonds', is still a driver for speculation on investment, but less so now that the foreign press continues to examine the record of Enrique Peña Nieto, whose drug ties connect Los Pinos to Guerrero's heroin and marijuana trade via the unguarded roads connecting Guerrero to 'Estado de México'. Fiefdoms in Veracruz and Guerrero too are now subject to more scrutiny in elite sectors of the global economy. New York, for instance, has seen a notable increase in protests, media and overall rejection of the Mexican government. The UN has also contradicted official investigations and expressed concern for México's human rights situation.

A huge number of high profile killings, disappearances, rapes and kidnappings have taken place in Guerrero against the backdrop of an unresolved 2 year old case of the 43 Ayotzinapa student disappearances. Less respect has been paid to Mexican security forces with cartels now launching offensives against the unpopular military through its police contacts - more instability. The assasination of 2 Ayotzinapa students and terror killings of 4 more civilians who happened to be using the same public transportation vehicle has already increased calls to reduce US funding of México security forces. Implicitly, the current climate can not be maintained and market is voting with its wallet.