Lessons from Covid-19 for Mexico, during and after

Mexico has lessons from Covid-19 to learn to make decisions both now and after its risk of high contagion passes, highlights Bart A. Pattyn, Crisis Manager at Bart A. Pattyn Management b.v.

Although there are doubts about the extent of infections (over 600,000), and the number of deaths (over 66,000) directly caused by Covid-19, even official numbers indicate that the spread has not been controlled.

Most of the cases are concentrated in the large metropolitan area that surrounds Mexico City, including the states of Mexico and Puebla.

Given the peculiarities of the country, the financial consequences are much worse than those of the financial crisis of 2008/09.

Lessons from Covid-19

The Mexican economy has been in decline since the second quarter of 2019, accelerating to 17.1% in the second quarter of 2020.

According to Pattyn, with five consecutive quarters of negative growth, with a decline of more than 10% overall, Mexico is very close to an official depression.

Mexico has the ultimate challenge to return to normality …

Pattyn exposes that most of the components of the Mexican GDP are threatened: low oil prices, negative growth in the main export market (United States), collapse of the tourist industry and a large part of the population depends on the informal economy.

Formal employment figures declined with more than one million jobs in the second quarter of 2020.

Social distancing

For Pattyn, another of the lessons of Covid-19 is this: in the Mexican reality, the concept of distancing and social enclosure, as used in Europe and Asia to contain the infection, is not viable.

“Many people depend on a daily income earned through manual labor or selling in public markets and for cash, both in rural and urban areas. Families live in fairly large intragenerational groups, which makes transmission from children to the elderly more likely, ”he says.

Reactivate the economy

The challenges faced by the authorities to relaunch the economy are exceptional and are not fully under local control, it could be another of the lessons of Covid-19.

The President’s program of spending $ 26 billion on social programs (about 3% of GDP) would help; but it is not enough, according to Pattyn, to cover real needs, and it is not very impressive in the face of the economic contraction.

The reality is that millions of families will fall into poverty. According to Coneval, which controls poverty, up to 11 million people could fall into extreme poverty, and 49 million in total could live in poverty.

Healthcare

The limited availability of advanced medical care is an additional factor. Mexico has on average two hospital beds for every 100,000 inhabitants, much less than in Europe (Germany has eight beds for every 100,000 people).

While families with access to formal employment also have access to IMSS medical care, advanced medical care (and respirators in Intensive Care Unit units) often remains a privilege for families who can afford private health care.

Covid-19 Lesson Conclusion

Mexico is one of the countries in the growth markets most affected by Covid19. The economy will suffer deeply and many middle class families will end up in poverty.

Government policies have so far failed to cope with the new realities.

Covid-19 is a serious social and economic setback for Mexico.

Yet another of the lessons of Covid-19: Once the situation normalizes, Mexico will have the advantage of being on the front line to replace the supply lines that now run from China, but in the meantime, the country needs intensive care.

Pattyn emphasizes that one of the Covid-19 lessons to be learned from the current crisis is this: quality healthcare must be available to everyone, and healthcare workers are the only ones a person really needs when things go wrong.

The world and the global economy are experiencing an unprecedented transformation, a rollback of 50 years of globalization and the danger of escalating armed conflict. There will be a different world order, a different economy, and a different world trade.

The latest of Covid-19’s lessons, according to Pattyn: It’s time for companies to embark on the talent to deal with the crisis.