G9: Another Closure Would Devastate Economy

G9, a collection of business organizations, warns that another economic closure in Mexico would be devastating to the economy, causing mass closures and layoffs. The decision, borne out of concern for the worsening third COVID-19 wave, could undermine national fiscal recovery efforts and exacerbate urban poverty.

The Minister of Health announced that Mexico City was returning to a state of red alert in response to swelling infection rates, registering a total of 2.98 million cases in the country on Monday. Conversely, shorty after this announcement, the Mayor of Mexico City, Claudia Sheinbaum, said the capital remained at level orange and would remain so until August 22. At his morning press conference, President Andrés Manuel López Obrador backed Sheinbaum over his Deputy Minister of Health Hugo López-Gatell, assuring that the city remained at level orange.

Out of concern, service industry leaders backed Sheinbaum’s assessment and reaffirmed their commitment to continue operating with total responsibility and in observation of sanitary measures to guarantee the safety and wellbeing of their employees, consumers and suppliers. Now that there is a better understanding of how to deter further infections and ongoing vaccination efforts another closure is deemed unnecessary and regressive, according to business leaders.

Another closure would be a death sentence to the many businesses that have struggled to survive the pandemic without much federal assistance, if any. More than a million business have already gone under taking with them millions of jobs that the economy has not been able to recuperate. Last year, Mexico City saw its poverty rate increase by 163.3 percent because of the pandemic. If another shut down comes to pass, it will only continue to push people into poverty without fiscal intervention. Corresponding economic sectors would retract and consumer spending would be hit, affecting secondary sectors and undoing months of economic progress that helped improve the country’s economic outlook for 2021.

With the support of the President, it seems unlikely that the economy will be shut down but as the third COVID-19 wave kicks off in the middle of the fall season the idea cannot be completely dismissed. If the federal government wants to avoid shutting off the profitability of one of its most lucrative centers it must meet business leaders half way and continue following through with its ongoing vaccination efforts.