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Mexico: On paper, the extent of the pandemic seems manageable

News from 2020-06-24

In Mexico, too, the strong restrictions adopted to fight the coronavirus are now being eased, as Helge Jahn, head of the KfW office in Mexico City, reports. Despite government aid, however, many people will have to face a loss of income and growing poverty in the long term. And even the crime rates reflect the consequences of Corona.

In Mexico, the first corona infection was confirmed on 28 February 2020, and the economy and public life were already largely in lockdown since the second half of March. A large proportion of new infections were registered in Mexico City and the neighbouring conurbations. By 23 June, more than 185,000 people had become infected with the virus and almost 23,000 had lost their lives - that is 175 deaths per million inhabitants. However, with less than five tests per newly infected person, Mexico is also the OECD country with the lowest number of tests, so that a high number of unreported cases can be assumed.

Blick auf das Monument „El Caballito“ an der Kreuzung von Avenida Reforma und Avenida Juárez
In public places life was much more quiet than usual. But many residents simply cannot afford to simply stay at home - and thus forego income.

Healthcare system - good by regional standards

The capacities in the health sector are good by Latin American standards. The government has not only expanded the hospital infrastructure and recruited additional staff, but has also opened up military capacities for civil needs. COVID-19 patients with state health insurance can be treated in private hospitals, and people who do not have insurance cover at all are also admitted to state hospitals. Nevertheless, staff shortages, lack of respiratory equipment and a lack of protective equipment are a problem.

Private sector involvement – donations of ventilators

Through privately raised funds, numerous ventilators have been donated to public hospitals throughout the country. They came from the USA and China and were delivered via the existing "air bridges". China also supplied Mexico with additional materials such as surgical masks and protective goggles.

Restriction of mobility

Due to the rapid spread of the virus, the social distancing and other measures adopted by the government were initially extended, including the suspension of all non-essential activities. Companies were monitored to ensure that the regulations were being observed - fines were the order of the day.

The first relaxations came into force on 13 May. Depending on the number of positively tested cases, economic and social life could be resumed locally, and from 1 June onwards, a far-reaching opening in all economic sectors finally began, yet in phases.

Schools and universities will only return to face-to-face teaching when it is safe for students and teachers. Primary schools will also remain closed until at least August due to inadequate sanitary conditions in many states.

However, Mexico has still not closed its borders, although, as agreed with the US, non-essential travel along the land border of both countries has been restricted. But the economically important exchange of goods with the USA took place even during the phases of particularly high infection rates.

Blick entlang einer der wichtigsten Verkehrsstraßen von Mexiko-Stadt, der Avenida Reforma.
The view along the Avenida Reforma, one of the most important traffic routes of Mexico City.

Government measures to save the economy

To cushion the social and economic impact of the Corona crisis, the government has adopted various measures, including the provision of one million microcredits, advance payments of pensions, assistance for social housing, small and medium-sized enterprises. Yet according to the IMF, the financial scope of the rescue packages is rather modest, as the few measures, which are more social than economic policy oriented, should be financed without additional new external borrowing.

Current economic consequences

As a result of the lockdown in its various phases, Mexico lost around 555,000 formal jobs in April 2020 alone - the highest monthly decline since records began, surpassing the severe economic crises of 1995 and 2008. An unemployment rate of around 11% is expected by mid-year. However, since most of the workforce depends on the informal sector, this is where people's need and existential fears are particularly great.

According to IMF estimates, the corona crisis is likely to result in a 6.6% slump in growth - after an estimated increase of 1% at the beginning of the year. It is therefore already foreseeable that very many families will have to reckon with extreme income losses and poverty will increase.

Security situation

As the United Nations Development Programme (UNDP) reported, during the first month of pandemic containment measures in Mexico, there was an 80% increase in calls for help from women who have suffered violence. There were also numerous attacks on health workers, mostly by people who feared infection from doctors or nurses. As a result, in some states there are now fines or imprisonment of up to 6 years in prison for offences of this kind. In order to protect medical facilities and their employees and to accompany the delivery of relief supplies, the government has also sent parts of the Mexican armed forces to the states most affected by the virus.

General criminal activity also increased by about 14% between March and April. Although the activities of the drug cartels decreased slightly due to Corona, 2,585 murders were recorded in March 2020 - the obvious consequence of intensified territorial fighting.

Blick über den abgesperrten Vorplatz auf den Palast der Schönen Künste.
The closed-off forecourt of the Palace of Fine Arts ("Palacio de Bellas Artes").