Flooding is costliest disaster ever in Mexico at $5.7 billion – At least 3 percent of farmland destroyedPosted by Jim at Saturday, September 28, 2013
By Luis Rojas, with additional reporting by Miguel Gutierrez; Writing by Dave Graham; Editing by Leslie Gevirtz
27 September 2013
MEXICO CITY (Reuters) – Severe flooding that hit Mexico this month is likely to knock off about 0.1 percentage point from growth in 2013, with reconstruction efforts in the final quarter helping to dampen the impact, Finance Minister Luis Videgaray said on Friday.
"The effect will obviously be concentrated on September, and the reconstruction work will have a positive impact on gross domestic product in the last quarter of the year, so the net effect will be about 0.1 percent of GDP," Videgaray said.
Prior to the flooding that killed more than 130 people, destroyed much farmland, and ruined roads and bridges, the government had forecast growth of 1.8 percent for this year.
Speaking on Mexican radio, Videgaray said the flooding would have a temporary impact on inflation of no more than 0.15 percentage points and that the economy would see stronger growth in the third quarter than in the previous three-month period.
Mexico's economy contracted in the second quarter.
Mexico's insurers' association said on Thursday the damage from floods sparked by tropical storms Manuel and Ingrid could top 75 billion Mexican pesos ($5.7 billion), the highest cost ever from a national disaster in the country.
At least 3 percent of the country's farmland has been destroyed by the floods, and Videgaray said that would ratchet up the cost of some agricultural goods for a short period.
With the boost to prices, annual inflation could reach around 3.6 percent at the end of 2013, the minister added.
The Mexican economy is heading for its weakest performance since 2009, barely growing in the first half of the year and sparking fears the country is flirting with recession.
Videgaray emphatically denied that Mexico had entered a recession, pointing to growth in July, reported by the national statistics office earlier this month.
Still, pessimism about the prospects for Latin America's second biggest economy have increased due to the flooding, a poll of analysts this week by Reuters showed.