Flu-conomics: a Look into Informal Trade
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Flu-conomics: a Look into Informal Trade

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Alessa Flores By Alessa Flores | Senior Journalist and Industry Analyst - Fri, 03/27/2020 - 13:07

Much has been said about how big corporations try to minimize the economic effects of the crisis and how small businesses have been impacted by the low number of people on the streets. However, there has been no discussion on the impact the pandemic has on the informal economy. When the formal economy is affected, the informal economy is also affected.

For every MX$100 (US$4.3) produced in the country, MX$77(US$3.4) come from formal jobs. The rest comes from the informal economy. More than half of Mexicans are employed in non-regulated activities or in jobs that do not generate benefits, economic support or any other incentive under the law, according to INEGI. In addition, 43 percent of people working in the country are employed in formal jobs, while 57 percent are employed in non-regulated activities. In addition to the precarious conditions resulting from the very existence of informal economic sectors, more than half (57 percent) of employees in this sector earn a maximum of two minimum wages, equivalent to MX$5,300 (US$227) per month, according to INEGI.

Mexico has an estimated GDP of US$1.15 billion and occupies the 15th place in the global economy ranking of the richest countries. In addition, the informal economy accounted for 22.8 to 22.5 percent of GDP in the last four years and represents more than 50 percent of the employment in the country, according to INEGI figures. Thus, the most impacted by the COVID-19 crisis will be those that are part of the informal economy because their income comes from the sale of goods and services generated from the movement of people on the streets.

China has been the world's largest exporter and a core part of global supply chains over the last two decades, according to the World Economic Forum. It is a leading manufacturer of goods and components for cars, cell phones and medical equipment, among many other products. The emergence of COVID-19 in China has triggered a 2 percent contraction in manufacturing output in the country in the last month and has already triggered an approximate loss of US$50 billion to the world economy, according to the UN Conference on Trade and Development. If the losses that are traceable and countable reach those figures, how much will those that we cannot see or count amount by the end of the crisis?

Photo by:   by jcarlosmpxl

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