In September of 2017, two separate earthquakes just weeks apart brought a great deal of destruction and casualties to Mexico City and the states of Morelos, Puebla, Oaxaca and Chiapas. The aftermath of these tragedies revealed a death toll that climbed well over 400, completely leveled over 60 buildings, and left thousands of other structures with significant damage. The effects will continue to linger in several ways for an extended amount of time, as these regions focus on recovery with not only their infrastructure and housing, but their respective business environments as well. Globally-renown businessman and foreign exchange expert Pablo Soria de Lachica discusses the financial prospects for the areas affected by these earthquakes, highlighting positive projections over the long term as they rebuild and move on.
Shortly following the quakes throughout Mexico, the initial fallout was easy to see. Many businesses were total losses, while others sustained heavy damages that would prevent them from being fully functional for months to come. The upheaval and displacement of thousands of residents was an instant factor as well. According to BBVA Research, preliminary figures revealed $2.5 billion in property losses alone. Pablo Soria de Lachica points out that natural disasters often have two different effects on local economic activity. The most immediate is the destruction of capital stock in the short term, followed by a sustained boost stemming from reconstruction efforts. The overall effect on GDP growth varies, and is largely dependent on the nature of the losses in relation to the financial impairment of the area.
In this instance, it is imperative to note that the earthquakes did not damage the productive capacity of the regions, as their related infrastructures were largely unaffected. The main effects in these areas were loss of private property and housing, and a disruption to the service industry within the vicinity. However, local economies are expected to quickly rebound over the next several quarters thanks to the ongoing construction efforts, while lost capital is gradually replaced over time. “The earthquake is going to delay the advancement of the economy, but it’s not going to derail it,” Moody’s Analytics Latin America director Alfredo Coutino Zavala told the Los Angeles Times. Coutino anticipates 2018’s rebuilding efforts bringing about a small 0.4% to 0.5% boost for Mexico’s gross domestic product, as a large amount of workers are hired and the government makes use of its substantial disaster relief fund within impacted regions–both of which are positives for the communities. The increase of activity within the construction sector, as well as private and public spending will bolster a marginal positive effect over the next year, which is sure to improve the business climate in these areas.
Pablo Soria de Lachica is an internationally acclaimed broker and esteemed authority on foreign exchange. A graduate of Universidad Tecnológico de México, he currently collaborates with Kartoshka, a global leader in the development of technology for sales, telemarketing and customer support. Pablo specializes in creating online trading tools to aid investors, while also conducting market analysis and overseeing day-to-day financial operations for several prominent companies that enlist his services. A deeply committed philanthropist, his community support includes active involvement in local Boy Scouts and Delta Epsilon Sigma programs, and financial contributions to charity organizations such as Bridges for Peace and the America-Israel Cultural Foundation.
Pablo soria – Professional Profile – LinkedIn: https://mx.linkedin.com/in/pablosoriadelachica
