The twin blows of Hurricane Ingrid and Tropical Storm Manuel are jolting the Mexican economy. According to the federal Budget and Taxation Secretariat (SHCP), the storms will shave Mexico’s estimated 2013 growth rate from 1.8 percent to 1.7 percent. Federal officials expect growth to pick up pace during the fourth quarter of the year, but the latest downward indicators followed a series of previously announced reductions in the year’s projected economic growth rate, which plunged from 3.5 percent to 3.1 percent even before reaching a new low in the aftermath of September’s storms.
Damage to crops, infrastructure, schools and housing is immense. In the southern state of Guerrero, the hardest hit entity, one estimate calculated damages to more than 400,000 acres of mango, corn, coffee, bean, and tomato crops.
“Rural roads… are cut off,” said Ventura Reyes, spokesman for a group of state corn producers. “Greenhouses are clogged and crops flooded. There are towns disappeared because of the mountain mudslides.”
Abel Chavez Flores, a municipal official in Moyotepec, described a “sad situation” in a small community where residents depended on five-acre plots to tide them through the year. The federal Secretariat of Agriculture and Livestock (Sagarpa) has determined that 80 percent of staple crops in the impoverished La Montana region of Guerrero were destroyed by Manuel.
South of Guerrero, in Oaxaca, Manuel added another 50,000 or so acres to the approximately 300,000 acres of cropland which had already been damaged from drought, high wind, hail and rain by the spring-summer 2013 growing cycle.
On Monday, September 30, Mexico’s Interior Ministry published disaster declarations for the states of Guerrero and Michoacan and emergency declarations for eight others.
Higher inflation, especially in prices for food crops, is considered another consequence of the climate catastrophe. Last week, the SHCP raised its annual inflation estimate from 3.45 percent to 3.6 percent.
Overall, the Mexican Association of Insurance Institutions (AMIS) gave a preliminary estimate of about $7 billion in storm-related damages nationwide from Ingrid and Manuel.
“This means a debacle for entire regions that will lose years in their standard of well-being,” wrote analyst Juan Carlos Ortega Prado. “This is not a projection. It has already happened with hurricanes Paulina (1997) and Wilma (2005), from which there are still damages and entire communities that migrated.”
Recaredo Arias, AMIS general director, said the double assault of Ingrid and Manuel could prove to be the third costliest disaster for the national insurance industry, surpassed only by the 1985 Mexico City earthquake and Hurricane Wilma eight years ago.
In a September 30 appearance before the Mexican Senate, Economy Minister Ildefonso Guarjardo gave a more upbeat outlook on the post Ingrid/Manuel scenario, stressing the economic uplift from upcoming reconstruction work.
“The heart of the Mexican economy has been impacted by the hurricanes. They were devastating and had a great impact, regrettably, in the loss of human lives,” Guarjardo testified. “But on balance, we have elements that will finally convert into growth.”
The big question is who will pay for the devastation and with what resources. Essentially, the Mexican government’s natural disaster fund of approximately $1 billion was dwarfed by the costly visits of Ingrid and Manuel. Although insurance companies are expected to pick up the tab for approximately $1.2 billion in costs, it’s not clear how the rest of the bills will be paid.
In the farming sector, larger growers with crop insurance should emerge with their losses covered, according to Sagarpa. In Sinaloa, for example, the federal agency estimated that nearly 500,000 acres had crop insurance.
More than two weeks after the Independence Day weekend storm disaster, scores of isolated communities remain incommunicado by land, while thousands of people are lodged in temporary shelter. At least 130 people are said to have died from the passage of Ingrid and Manuel. The good news is that the Red Cross, government agencies and civil society networks are getting relief to more people. The bad news is that the rainy and hurricane seasons are far from over.
Sources: El Universal, September 27 and 29, 2013. Articles by Romina Roman, Paulina Gomez and editorial staff. La Jornada, September 28 and 29, 2013. Articles by Israel Rodriguez and Josefina Quintero. La Jornada (Guerrero edition), September 27 and 29, 2013. Articles by Citlal Giles Sanchez and Sergio Ferrer. Proceso/Apro, September 24, 27, 29, 30, 2013. Articles by Juan Carlos Ortega Prado, Marcela Turati, Ezequiel Flores Contreras, Pedro Matias, Jenaro Villamil, and editorial staff. Presidencia.gob.mx
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