On March 30 Mexico declared a health emergency and issued a decree with strict measures to contain the fast-spreading of coronavirus “COVID-19,” on non-essential activities in the public and private sectors that would be in force until April 30. In order to prevent the health system from being overwhelmed with the increasing number of cases, the government of Mexico announced the following measures in Spanish and English. The Mexican Health Ministry divided into five groups those essential activities: health, security, economy, social programs, and critical infrastructure.
Regarding critical infrastructure, this determination mainly refers to the conservation and maintenance of the basic infrastructure for the production and distribution of services such as water, electricity, drainage, sanitation and gas, to name a few. The non-essential services of the social and private sectors must immediately adopt modalities of teleworking, remote work or the like, without the activities of their workers being present.
Mexico had been suffering an economic slowdown for a year coupled with the collapse of the price of oil and unstable stock markets. With the current health situation, several industrial sectors are being impacted, such as tourism, automobile industry, financial services, cross border trade, construction and food industry. Meanwhile, USMCA is not in force yet. Mexico tried to implement the Infrastructure Plan 2019-2024 that included a new Energy Plan. However, the government has swiftly prioritized a number of programs to take care of the current pandemic. President Andres Manuel Lopez Obrador (AMLO) is developing an economic contingency plan that might include lower salaries to government functionaries while he is calling on the private sector to support and maintain its workers. Investors will pay close attention to the package designed by the federal government with tax measures and allocation to public spending that minimizes the closure of companies, restores national production of global value chains, subsidies and protection of employment. 2020 will be a year of economic contraction and this situation will weaken the financial well-being that affects the employment and social security for the Mexican population.
A client alert with the latest developments from Mexico is included here.