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Local Approach May Be Key to Mexico's Economic Recovery

By Alessa Flores | Wed, 08/19/2020 - 13:09

The impact of the COVID-19 pandemic on the country is profound and the data regarding Mexico's GDP performance is not very encouraging. INEGI revealed on July 30 that Mexico's quarterly GDP estimates fell by 17.3 percent in real terms during 2Q20. It also noted that the GDP of secondary activities fell 23.6 percent, tertiary activities 14.5 percent and primary activities 2.5 percent compared to the previous quarter. 

In view of the figures revealed by INEGI, its President Julio Santaella wrote on his Twitter account that "the substantial quarterly decline in GDP estimated for 2Q20 is the highest in the history of this macroeconomic indicator and nearly doubles the drops in 2Q95 (-9.1 percent) and 2Q09 (-8.9 percent).”

Mexican President Andrés Manuel López Obrador revealed during his morning conference on Monday, Aug. 17 that in 15 days his government will present a new project to reactivate the national economy. López Obrador also revealed the plan would be accompanied by a process of consultation with the business sector. According to estimates from the Mexican Social Security Institute (IMSS), 50,000 jobs have been restored so far in August out of the 925,000 formal jobs lost from January, explained López Obrador.

Also, within the framework of the 2020 Summit of Private Capital, Amexcap Online, Arturo Herrera, Minister of Finance, explained that Mexico will need private investment for the economic recovery to be faster, according to a note from El Financiero. "We are experiencing the worst financial and health crisis in a century, so a rapid economic recovery in Mexico requires long-term private partners," Herrera said.

Just one day after the declarations of President López Obrador and the Minister of Finance, UN-Habitat, in collaboration with the Ministry of Territorial Development (SEDATU), the Ministry of Health, the Pan-American Health Organization (PAHO) and the World Health Organization (WHO), published the "Methodological Guide for Municipal Socioeconomic Recovery in the Context of COVID-19.” The document aims to "guide municipal governments in the development of a Municipal Socio-Economic Recovery Plan (PRESEM) in the context of the COVID-19 pandemic, adapted to the specific conditions of their territory," explains an official statement from UN-Habitat.

UN-Habitat stresses in the guide that the importance and reason for developing PRESEM does not mean replacing or opposing measures taken by the federal government but to complement each other. Local governments are the nearest authorities to the people and are those that can provide a more valid reading and implementation of the solutions demanded by their territories and inhabitants. "Having a municipal plan based on a diagnosis, analysis of groups in conditions of vulnerability and holistic priorities makes it possible to ensure an efficient and coordinated response among the three orders of government to develop and finance lines of action relevant to each municipal territory, with its diversities and particularities," explains the PRESEM guide.

UN-Habitat said local governments will have to follow six steps to develop a Municipal Socioeconomic Recovery Plan:

  • Step 1: Governance. Includes the creation of a Municipal Steering Committee for Resilient Recovery, a Municipal Council for Social and Economic Recovery and thematic working groups.
  • Step 2: Multidimensional Diagnosis. Georeferencing dimensions that include health, local economy, employment and income generation; vulnerable groups; food supply; high-risk human settlements for COVID-19; adequate housing; mobility and transportation; public, green and reactive spaces.
  • Step 3: Identification of actions taken, effects and challenges. Identifying all the measures implemented in the territory in relation to COVID-19 and its effects to carry out a SWOT analysis of public policy measures in the context of the epidemic and promote actions by citizens.
  • Step 4: Identification of PRESEM priorities. Identifying the priority groups for the strategy and the specific actions for each priority group.
  • Step 5: Elaboration and approval of PRESEM. Drafting the municipal socio-economic recovery plan, approving it internally by the municipality and the population. Finally, preparing a roadmap for the implementation of the plan in the first 90 days.
  • Step 6: Implementation of PRESEM. Managing resources for financing the strategy, to communicate it assertively and promote citizen participation throughout the process.

It is expected that through PRESEM, municipalities will have a multidimensional approach to reactivating their territories and population. Considering that the health emergency has not been the same for all, characterization of the emergency by municipal governments play a key role.

UN-Habitat stressed that the success of local recovery will be based on "how municipalities and their governments manage to adapt national and state measures to build holistic responses to their particular situation, ensuring the necessary coordination of the three levels of government in the territory."

The data used in this article was sourced from:  
UN-Habitat, El Financiero, AMLO's Morning Press Conference, INEGI
Photo by:   8photo
Alessa Flores Alessa Flores Senior Journalist and Industry Analyst