Extortion in Mexico: a critical obstacle to economic stability and security.

The phenomenon of extortion in Mexico has escalated alarmingly, manifesting not only as a serious security problem but also as a significant obstacle to the country's economic stability. With a notable increase in the number of extortion victims, rising from 6,895 in 2018 to a record 11,039 in 2022, the impact of this crime is affecting market dynamics and contributing to an inflationary environment that the Bank of Mexico (Banxico) is striving to control. In a context where inflation is still far from the 3% target set by Banxico, extortions are generating a chain effect that translates into visible price increases for consumers. Testimonies from a dozen affected merchants reveal that the additional costs linked to "protection payments" have led to price increases for basic products, such as tortillas, which have seen increases of up to 20%. This is considered a silent "tax" gradually imposed on business operations and, consequently, on consumers. Banxico's deputy governor, Jonathan Heath, has pointed out that while there are no precise data to measure the direct impact of extortions on inflation, the anecdotal effect is clear. Extortions have become a structural variable within the Mexican economy, complicating the central bank's efforts to adjust its interest rate and control inflation. Heath emphasizes that although the phenomenon cannot be quantified precisely, it significantly affects price formation, especially in the services sector. The latest figures indicate that despite a slight decrease in extortion incidents in 2023, the problem remains entrenched in the economy. Andrés Abadía, an economist at Pantheon Macroeconomics, underscores that this phenomenon not only impacts businesses that are directly extorted but also has repercussions that reach the final consumer, making essential products more expensive in the daily diet of Mexicans. This has led the association of small merchants, ANPEC, to warn about rising prices for basic products such as avocados, limes, and chicken. The perception of insecurity has led many business owners to increase their spending on security measures, such as installing cameras, purchasing armored vehicles, and hiring guards. According to Coparmex, one in nine affiliates has been a victim of extortion in 2023, reflecting the normalization of a problem that should be considered exceptional. This situation has created an atmosphere of fear and distrust that inhibits investment and business growth. The impact of extortions is also evident in the agricultural sector. In Michoacán, for example, farmers have reported an increase in criminal "quotas," which have led to an 8% rise in lime prices in just 15 days. The pressure exerted by criminal gangs affects not only production costs but also jeopardizes price stability in the market, further complicating the central bank's efforts. The elected president, Claudia Sheinbaum, has promised to strengthen the fight against extortion at a time when the outgoing administration acknowledges it has failed to eradicate this problem. However, many wonder if political promises will be sufficient to reverse years of impunity and violence linked to these crimes. The need for a comprehensive approach that addresses both security and the economy is more urgent than ever. The closure of businesses such as Oxxo in Tamaulipas, where the chain was forced to shut down 191 locations due to "demands" from organized crime, is a tangible example of how extortions are affecting business operations in the country. The reactivation of these businesses only occurred after a promise of increased security from the authorities, highlighting the fragility of the business environment in the face of the threat posed by organized crime. In conclusion, extortions in Mexico represent a multifaceted problem that not only affects the safety of citizens but also interferes with the country's economic and monetary objectives. While analysts continue to debate the magnitude of the impact on inflation, the reality is that the repercussions are tangible and visible in the daily lives of Mexicans. The fight against this phenomenon cannot wait any longer, and the responsibility lies with both the government and civil society to create real and lasting change.