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Mexico will add 12 to 16 million poor people due to pandemic: BBVA

The pandemic has left around 100,000 deaths and more than a million infections in the country, in terms of the economy it is in a critical situation with a cumulative fall of 9.6% in Gross Domestic Product (GDP), resulting in dozens of millions of people in new poverty, and if they have an economic solution from the government.

According to a study by BBVA Mexico, if the economy has a 7% decrease this year, it would leave 12 million people in poverty and 12.3 million would fall into extreme poverty.

Informal work predominates in Mexico. Photo: Reforma

Edmar Ariel Lezama, coordinator of the Unique Program of Specializations of the National Autonomous University of Mexico (UNAM) expressed that this was not a different tactic from the other countries because there was not really an economic strategy.

Based on a study by Johns Hopkins University, Mexico is in the eleventh place of the countries with the most infections and is the fourth with the highest number of deaths.

In addition, according to the International Monetary Fund (IMF) it is one of the most affected economies, which foresees a 9% contraction this 2020.

Damaged economy

The specialist in finance and applied economics Eugenio Sánchez said that since before the pandemic, Mexico already had a decrease of 0.3% in 2019, already having an accumulation of contraction of six quarters

He pointed out that this aspect in the country was already looming with a slight recession due to the change of government that brought uncertainty, in the whole of 2019 there was not a quarter in which public or private investment grew.

The government maintains the argument that the economic curve will be a « V » because the bottom has already been reached in the second quarter of the year, with a historical annual contraction of 18.7%, plus an evident rebound from July to September. having a quarterly growth of 12%.

Although the specialist agrees with this statement that the economy has already hit bottom, however, he stressed that the pandemic leaves economic marks that will take time to recover.

He also pointed out that the recovery will take place in two stages, the first will be rapid, but then it will not be at that pace, he warned that the consequences for many people, specifically the poorest, can remain for years.

Informal employment would increase

The percentage of poor population by income in Mexico would increase from the current 48.8% to 58.4%, while extreme poverty would grow from 16.8% to 26.6%.

In this regard, Sánchez comments that “the recovery is not equitable across the different sectors. For example, from the 2008 crisis, unemployment and poverty took eight years to recover even though GDP recovered relatively quickly.

Arturo Herrera, head of the Ministry of Finance and Public Credit (SHCP), notified that due to the pandemic the country lost 12 million informal jobs and more than 1 million formal ones.

He added that so far, Mexico has recovered 7.5 million of those positions, at least 7 million from the informal sector.

« We have been having this (economic) rebound already throughout these months, from June to now, having until now under control of the pandemic, » he emphasized.

However, Lezama pointed out that if Mexico has outbreaks as in the case of Europe or the United States that requires reconfinement, the consequences can be fatal because between 55% and 60% of the workforce is informal.

He also expressed that just because it is a mostly informal country, it is already at a disadvantage, in case of returning to the confinement the same will happen as at the beginning of the pandemic with all the families that cannot generate any income, because they are not in a formal job.

In the crisis, inequality is even more evident

According to an exploration by the Regional Center for Multidisciplinary Research of the UNAM, three out of four deaths from covid-19 in the country, 1l 75% only had a basic educational level that corresponds to primary or secondary.

On the other hand, 48% held a trade or manual occupation, in addition 45% were housewives, retired or unemployed.

In this regard, Lezama specifies that they are usually poor people who had an informal job, which explains why they do not have access to a health unit and do not have a stable income so that they can buy medicines or have a fund savings to face this situation.

Finally, he added that the deaths caused by the pandemic in terms of the workforce have an economic impact that may not be reflected in the short term but in a medium and long term.

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