Coronavirus Weakens Fragile Mexican Stability

Coronavirus reached Latin America in February 26th, almost three months after the first case appeared in China and just over a month after it was detected in Europe. Many countries in the region acted immediately, taking a range of measures such as closing borders, quarantines and in some extreme cases, curfews, all in an effort to avoid the collapse of Latin American healthcare systems. There have been, exceptions to these strategies, among them Mexico.

In the midst of a controversy over the lack of importance that the president gave to the pandemic and his dismissals of public opinion and pressure from other nations, Mexico announced a national public health emergency decree, issued by the López Obrador government on March 30th, when there had already been 50 fatalities, almost a month after the first infection was detected in the country. The decree, not a mandatory quarantine, stipulates the suspension of all non-essential public, private and social activities, including those of the federal government, all schools at all levels and a section of the private sector, those that can work remotely, have also suspended on-site work until April 30th.

According to the latest United Nations data, Mexico has a population of almost 129 million and there are 29 health workers for every 10,000 inhabitants. By April 13th there had been a total of 332 deaths out of 5,014 infections, although the Mexican government estimates that the rate of infection is 8.2 times higher, which translates to 38,200 infections. Of the total confirmed cases, 26% required hospitalization: 9% of them are stable, 14% are serious cases and 3% died.

Regarding tax reform, President López Obrador announced an economic reactivation plan, which consists in three main parts: public and social investment, job creation and federal public administration austerity. Those statements left the private sector dissatisfied, the sector considering them to be insufficient to alleviate crisis of this size. President López Obrador ruled out tax reductions, however he guaranteed there would be no increases. The business coordinating council is expecting the government to introduce a much more aggressive fiscal policy that helps the private sector to maintain jobs levels during this crisis, calling for a ‘great national pact’ between the private sector, workers and society to deal with the crisis and to present proposals to the federal government action to be taken by the authorities. The president is already facing rebellions from the chambers of commerce of some states in the Mexican Republic, which threaten to withhold taxes in protest at the government’s refusal to deliver solutions to offset the impact of the quarantine.

In the energy sector, major oil-producing nations struck a landmark deal on April 13th to cut global oil production and end a price war. The Organization of the Petroleum Exporting Countries (OPEC) will cut 9.7 million barrels per day, of which Mexico will cut production by 100,000 barrels, in an effort to try to stabilize the market.