Sinaloa records the worst economic downturn in the country

Sinaloa, Mexico's top agricultural producer, has recorded its worst economic decline since late 2024, with a contraction of 4.5 percent in the first quarter of this year compared to the previous quarter. The state’s economy, which had long been a cornerstone of national food production, now faces severe challenges including widespread business closures, mass layoffs, and persistent insecurity. These issues have left Sinaloa with the lowest economic performance among all Mexican states, according to data released yesterday by the National Institute of Statistics and Geography (Inegi). The economic downturn follows the arrest and transfer of Ismael “El Mayo” Zambada, a key figure in the Sinaloa Cartel, to the United States two years ago. Since then, the region has struggled with instability, particularly after former governor Rubén Rocha Moya stepped down temporarily due to U.S. allegations linking him to the cartel. Yeraldine Bonilla, a Morena party member, has served as interim governor since May 2nd. According to the latest quarterly economic activity indicator from Inegi, Sinaloa’s economy shrank significantly, with the contraction attributed primarily to security concerns. These fears have discouraged investment and hindered new business openings, according to Adriana García, coordinator of Economic Analysis for Mexico’s “¿Cómo vamos?” initiative. She stated that insecurity has become a major obstacle to economic development in the state. Security conditions in Sinaloa have deteriorated sharply. Recent surveys show that 90.8 percent of adults in Culiacán, the state capital, felt unsafe in June, up from 84.4 percent in March. This makes Culiacán the second most insecure city in the country, behind Irapuato in Guanajuato. The perception of danger has led to a significant drop in formal employment, with nearly 27,000 jobs lost in the first half of this year, marking the largest loss nationwide. Wages in Sinaloa are also lower than the national average. According to the Mexican Institute of Social Security (IMSS), the average daily wage in the state was 534 pesos in March, compared to the national average of 664 pesos. This discrepancy has further reduced the purchasing power of local residents, exacerbating economic hardship. Adriana García emphasized that businesses are either closing or reducing their workforce due to ongoing security issues. She called for improved safety measures to allow residents to resume normal activities. Martha Elena Reyes Azueta, president of Coparmex Sinaloa, warned that the state is facing a multifaceted crisis involving economic, social, and security challenges, leading to the closure of thousands of businesses and creating uncertainty among the population. Jesús Márquez Rojas, vice president of research economics at Banamex, noted that Sinaloa is the leading producer of corn, tomatoes, beef, and milk in Mexico. However, the state’s GDP growth has suffered partly due to a 16.6 percent decline in agricultural activities, driven by lower meat production and increased tomato prices early this year. Despite these setbacks, Márquez Rojas predicted a gradual recovery later in the year, supported by agricultural output, mining, and construction sectors, though he stressed the need for greater certainty to attract investments. As of 2024, over 533,000 residents in Sinaloa were living in poverty, with 46,000 in extreme poverty. The combination of economic decline, high unemployment, and poor wages continues to strain the state’s social fabric. With the situation showing no immediate signs of improvement, the future of Sinaloa’s economy remains uncertain.