TIJUANA A leading economist said Baja California will face a challenging year as higher prices for basic goods pummel average households and new arrivals continue to pressure the ranks of the employed.
Alejandro Díaz Bautista, a researcher with the Mexico's National Council of Science and Technology, predicts that Baja California's GNP will increase up to 4 per cent this year if the United States continues its economic recovery.
The state's source of growth is its foreign market. That's why he fears the European crisis could drag the U.S. into a second recession that would have a major negative impact on Baja California.
Baja California should aim to increase production in the industrial, commercial and service sectors, with support from the government, private companies as well as research centers, universities and cultural institutions.
Díaz said the state should take greater advantage of the advances occurring in the United States in areas as aerospace, automotive, electronics, wine, software, recreation and sports articles, tourism and medical tourism.
Unemployment
Baja California reached a record high unemployment rate of 6.63 per cent in November, according to monthly figures released by Mexico's statistics agency.
According to Díaz Bautista, the flow of people from central Mexico arriving on the border looking for work drove the unemployment rate higher in the region. Baja California is taking steps to create more job opportunities, he said.
In November, he explained, the states along the border had the highest unemployment rate in Mexico: Chihuahua with 6.95 per cent; Tamaulipas with 6.67 per cent; Baja California with 6.63 per cent; Nuevo León with 6.5 per cent; Sonora and Coahuila both with 6.26 per cent.
Díaz, also a professor at the College of the Northern Border said Baja California has the most dynamic labor market in the country. That's because both the employed and unemployed populations are greatly affected by the migratory movement that flows from the southern part of the Mexico toward the north.
And that's in addition to the people from California, many who have been deported, who pressure the labor market when they return to Mexican soil.
Prices increase
The prices of basic foods rose 0.47 per cent in the first two weeks of December, compared to 0.12 per cent in the same period of 2010.
The prices went up because of the relative weakness of the Mexican peso against the U.S. dollar. Further, a drought in the north and flooding in southern Mexico contributed to the rise in the price of agricultural products.
"What we observed is that the exchange rate, which has held above 13 pesos per dollar, is beginning to have certain influence on consumer prices, which was seen reflected in inflation the first two weeks of December. During that period, the prices of the goods and services in Mexico showed their biggest jump in 11 years at the national level," he explained.
Inflation has a series of harmful effects on the economy, including the loss of buying power for families.
The products showing the greatest price increase were milk, chicken, tomato, beef, squash and beans. In addition, prices went up for electricity and gas as well as tourism-related services, airline travel and international bus travel.
And, as of Sunday, public transit cost an additional peso and it will go up another peso in June, which hits working-class families hard.
Potential plant closings
The economist said the threat of more plants and maquiladoras closing has not disappeared.
"The maquila sector in Mexico, which is fundamental to the border's economy, has lived in a precarious situation for more than a decade," he said.
Since 2000, the maquiladora industry on the border has not generated jobs. Chinese exports have affected many Mexican sectors, not just at the plant level but at the industry level, he said.
"That's the challenge to overcome in 2012," he said. "The deceleration of the United States produces less activity in the northern border but at the same time there's a competition between Mexican products and those from China. That's why Mexico needs to improve its competitiveness compared to that Asian country."
Omar.millan@sandiegored.com
