Mexico prepares to start getting economy back in gear, looks to U.S

MEXICO CITY (Reuters) – Mexico’s government said it will on Wednesday set out plans to reboot the economy after weeks of disruption from coronavirus, in a move that is likely to see highly automated industries lead the way in coordination with U.S. business partners.

“Tomorrow we will lay out the plan to return to the new normal,” President Andres Manuel Lopez Obrador told reporters on Tuesday. “It’s not going to be a return to normal,” he added, “because there have been changes. Reality has changed.”

The coronavirus has brought key sectors of industry to a juddering halt in Mexico, which has registered more than 3,500 deaths from the pandemic and is poised to suffer an economic contraction of up to 10% or more this year, analysts say.

Mexico sends some 80% of its exports to the U.S. marketplace and became the United States’ biggest trade partner last year, with bilateral commerce worth well over $600 billion.

Lopez Obrador signaled last week that manufacturing industries like carmaking, as well as mining and construction, would likely be among the first to restart operations. Service sector businesses like tourism would follow later, he said.

Mexico’s government has been studying the experience of other countries that have been emerging from strict lockdowns and believes that highly mechanized factories offer better conditions to control the risk of contagion, officials say.

Mexican auto output fell by nearly 99% in April, and the government is under pressure from the United States to synchronize its restart with American companies that rely on supply chains from south of the border.

Still, Mexico’s government has stepped up efforts to coordinate the re-opening with the United States in order to ensure the economy benefits from a U.S. recovery, a Mexican official said, speaking on condition of anonymity.

“We want to reboot with the U.S.,” the official said.

Speaking at his daily news briefing, Lopez Obrador said Mexico was drawing up a plan in line with which municipalities were most infected with the virus, and which least.

Restrictions could start to be eased in parts of the country as soon as May 18, while harder-hit areas may have to wait until the start of next month, the government says.

According to data compiled by the Tecnologico de Monterrey university, some central states with heavy automotive operations, including Guanajuato and San Luis Potosi, have, per capita, logged far fewer cases than the national average.

A similar picture emerges in three key mining states, Zacatecas, Durango and Sonora, as well as the western state of Jalisco, a manufacturing hub for the electronics industry.

U.S.-based carmakers are targeting a restart on May 18 and their Mexican counterparts are hoping to begin the same day. Mexican officials note that the U.S. coronavirus death toll and infection tally is far higher than Mexico’s.

Still, Mexico’s daily death toll from the outbreak reached its highest point on Thursday and Lopez Obrador must strike a balance between saving lives and limiting damage to the economy.

Mexico’s Social Security Institute said 555,247 people registered with it lost their jobs in April.

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