What sectors will boost the Mexican economy after the vaccination?

The Ministry of Finance and Public Credit (SHCP) highlighted a series of sectors that will boost the Mexican economy with vaccination against Covid-19.

As of April 14, 2021, the Latin American and Caribbean region had almost 26.7 million confirmed cases (19.3% of cases worldwide) and more than 846,000 deaths (28.4% of deaths worldwide).

Specifically, Brazil, Mexico, Colombia, Argentina, and Peru had the highest number of deaths in the region, and Brazil and Mexico had the highest number of deaths worldwide after the United States.

According to an analysis by the US Congress, the deployment of vaccines in the region has been slow, with a few exceptions.

For now, there are concerns that widespread access to vaccines in some countries could be delayed until 2022.

According to the Pan American Health Organization (PAHO), as of April 9, Chile was the leader in the region, with 37% of its population having received a first dose.

Several Caribbean countries that received vaccine donations from India (Antigua and Barbuda, Barbados and Dominica) had vaccinated more than 20% of their population with a first dose.

However, many countries in the region have vaccinated smaller percentages of their population.

For example, as of April 9, 2021, Argentina had vaccinated 9.3% of its population with a first dose, Brazil 8.9%, Mexico 5.8%, Colombia 4.2% and Peru 19%.

Mexican economy

For the SHCP, progress in the vaccination program will benefit the most lagging activities, particularly face-to-face activities and those with greater personal contact, which are expected to have an accelerated recovery and will contribute significantly to the Mexican economy in 2021.

The transport, postal and storage sector stands out with a percentage of 5.6% of GDP and that, in the fourth quarter of 2020, presents a recovery of only 85.5 percent.

Added to the sectors of accommodation, food preparation, cultural entertainment, sports and other services, these sectors as a whole have a weight greater than 9.0% of the Mexican economy and in the fourth quarter they show a recovery of 78.6 percent.

On the other hand, agriculture, mining, and the manufacture of petroleum and coal derivatives are sectors that have been recovering rapidly since the third quarter of 2020.

Economic recovery

In particular, the mining sector and agriculture could be more dynamic in 2021 due to increases in the demand for industrial inputs and higher prices of raw materials.

The employment figures provide another perspective on how the recovery is being determined by the ability of sectors to reopen safely.

Of the 2.7 million jobs that remained to be recovered as of February 2021, compared to those a year earlier, 76.2% came from the tertiary sector.

As the vaccination program progresses, the SHCP expects a notable improvement in the labor market that, together with a resilient flow of remittances, will continue to support the population’s private consumption.

While in 2020 most of the growth in consumption came from products rather than services, in 2021 the consumption of services is expected to recover once official or voluntary restrictions ease.