The federal government presented this Wednesday a reconstruction and social support plan to mitigate the damage from Hurricane ‘Otis’, which hit the coast of Guerrero last week, and which would have resources of up to 61,000 million pesos.
However, The level of destruction left by the meteorological phenomenon in Acapulco can be up to three times greater than what was budgeted by the government in its plan.
The costs of destruction include not only the perceived damages, which in themselves are enormous, but also include the work situation, the business climate and the deepening of historical lags such as education.
Last Tuesday, President Andrés Manuel López Obrador said that in December the port will be standing again and that “it will not be a bitter Christmas for Acapulco and its inhabitants.”
I hope so. However, the figures show that the uphill climb is very steep and it will take a lot of time and a lot of money for the full recovery of this important tourist destination in Mexico and Latin America.
Multimillion-dollar impact
On Tuesday, the firm specialized in the insurance sector, Gallagher Re, estimated that insured losses from Hurricane Otis in Mexico will reach 10 billion dollars.
In addition, he expressed that the event could become one of the most expensive, or perhaps the most expensive, ever recorded for the Mexican insurance market.
This would mean that in losses alone, the figure would amount to approximately 180 billion pesos, at the exchange rate of 18 pesos per dollar.
This would be 2.9 times more than the budget announced on November 1 by the government to build Acapulco. Part of the plan presented by President López Obrador and several officials in his cabinet consists of 10,000 million pesos to repair infrastructure, another 10,000 million to provide cash aid to victims, and 9,000 million in VAT and ISR payment exemptions until February.
The figure estimated by the insurer would also be 10 times greater than the amount that is supposedly labeled in the federal budget for natural disasters, arguing that they belong to the extinct Fonden and that they total 18,000 million pesos.
Likewise, this figure would be more than 16 times the amount indicated in the previous paragraph, which was later qualified by arguing that it was 11,000 million pesos.
If we talk about damage to infrastructure and uninsured losses, the figure must be much higher, At the beginning of the week some estimates estimated the damage at up to 15 billion dollarssomething like 270 billion Mexican pesos.
An investment of such magnitude to recover Acapulco in just under two months and leave it as before so that people are “happy” is no small feat, clearly not even the federal government is currently in a position to invest such a sum.
Surely there will be groups with economic power that will be able to face these expenses and recover them over time, other companies or small and medium businesses will simply have many complications even with the fiscal support already designed and implemented by the federal government.
In the end, the impact is so relevant that we will have to monitor how it will affect national finances and, without a doubt, those of a state that already had serious problems before and that today have been magnified.
More informality and unemployment, the other blow
According to the National Institute of Statistics and Geography (INEGI), Acapulco is a city with a high level of labor informality; it is estimated that around 60 percent of the employed workforce does so in this modality, a figure higher than the rate national 56 percent.
With this data, In labor terms before the cyclone the situation was already complicated, Today it looks truly terrifying.
It is true that Acapulco will need a lot of manpower to recover from the tragedy, but unemployment will surely multiply, which means that informal employees who were previously a considerable number will now be more so.
Since we are talking about unemployment, at the end of the third quarter of the year this indicator in Acapulco stood at 4.56 percent, above the national average of close to 3 percent, without of course considering the high labor informality in the port.
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