The World is Reacting to COVID-19, What Will Mexico do?

The potential impact of COVID-19 is now a reality in countries with leaders that at first underestimated the pandemic, like the US and the UK.

Dramatically breaking the 1982 record when unemployment claims reached 695,000, no less than 3.28 million Americans filed for unemployment benefits last week as a result of companies closing their doors to limit the spread of COVID-19. This marked a tremendous increase from the 282,000 unemployment claims filed in the previous week. The US economy is expected to enter a recession in 2Q20. While official forecasts predict an economic turnaround later in the year, this remains far from certain as the impact of COVID-19 on the US economy is hard to adequately forecast.

The number of COVID-19 deaths nears 1,000 in the US and cases continue to multiply quickly across the country. Yesterday, after days of intense negotiations, the US Senate approved a historic US$2 trillion stimulus package to protect nationals and companies as the US economy grinds to a halt under the pandemic. The largest emergency aid package in US history was approved unanimously in the Senate and will now move to the House of Representatives where it will be voted on Friday. The stimulus package will include US$250 billion for direct cash payments to individuals and families, US$350 billion for loans to small businesses, US$250 billion for unemployment insurance benefits, US$500 billion for loans for distressed companies, US$130 billion for hospitals and US$150 billion for state and local governments facing financial challenges as a result of the crisis.

The UK, another country with a slow initial reaction to the global situation, is now facing the impact of the COVID-19 pandemic as London hospitals are reporting a “tsunami” of infected patients. One third of the UK’s cases are in London, where hospitals are nearing intensive care beds capacity. An additional challenge is the fact that 30-50 percent of the staff in most hospitals are absent because they have contracted the COVID-19 virus or are in high-risk groups. The UK expects cases to peak in two to three weeks, which means that the upcoming challenge is enormous. In response, 12,000 retired staff have answered the call to return to the National Health Service (NHS), while over 18,700 student nurses and 5,500 final-year medics will join the NHS. The UK Health Secretary put out a call for 250,000 NHS volunteers, as well. After 560,000 people came forward, the total number of volunteers increased to 750,000 with the objective of supporting 1.5 million highly vulnerable people.

Testing is one of the main challenges in the UK’s response to COVID-19, as only 6,000 people can currently be tested daily. This number is set to increase to 10,000 by next week and to 25,000 in three weeks. There are only 8,000 ventilators available to the NHS, which combined with a lack of personal protective equipment such as masks, gowns and gloves, illustrates the UK’s vulnerability and the uphill battle it will have to fight in the coming weeks and possibly months.

Meanwhile, Mexico’s federal government remains slow to react and prepare for the imminent crisis that is bound to hit the country. While Mexico’s state governments are taking measures, the federal government has yet to announce any measures to support the Mexican economy, beyond a million loans of around US$1,000 that will be available for informal businesses. Unless President López Obrador gets serious about protecting jobs, many Mexicans might find themselves in the same position as the 3.28 million Americans who lost their jobs last week. The president refuses to grant tax waivers or relief measures, stating that "the neoliberal model no longer applies.” Some state governments are offering a 50 to 75 percent discount on payroll taxes, while others are considering eliminating this and other local taxes.

President López Obrador might be facing even greater challenges with a health system that is not prepared for the scale of the pandemic. His prognosis is that Mexico will not face big problems and he has encouraged Mexicans to continue spending their money at restaurants to support the local economy. IMSS, Mexico’s main public hospital network, has less than 2,000 intensive care beds and less than 2,600 ventilators available, which means that a patient count exceeding these numbers could have disastrous consequences.

Minister of Economy Graciela Márquez said that the supply of basic healthcare products needed to face the COVID-19 pandemic is guaranteed for at least the next 100 days. “We have a 100-day basic reserve. It is crucial to know at all times that there is availability of basic products,” she said. Márquez also highlighted that prices of tortilla, egg and chicken are being monitored by the ministry. The question is how those 100 days of supply have been calculated. If the pandemic is worse than the government’s expecations, the challenges will be tremendous.