Saturday, June 15, 2024

Over 1.5 million businesses shut down by COVID but 1.2 million new ones opened

The coronavirus pandemic has forced the closure of many businesses but it couldn’t kill off the Mexican entrepreneurial spirit.

Almost 1.6 million businesses closed for good between May 2019 and July 2021, a new study shows, but approximately 1.2 million new businesses were established in the same period.

A study by the national statistics agency INEGI found that just over 1.58 million businesses closed in the 27-month period, mainly due to the pandemic-induced economic downturn.

The economy slumped 8.5% in 2020, the worst decline in 90 years, but has recovered significantly this year.

INEGI said in a press release Tuesday that 32.6% of almost 4.9 million businesses counted in its May 2019 economic census – of which 99.8% were small and medium-sized enterprises – had closed by the end of July 2021. The worst affected sectors were services excluding those offered by the finance industry, retail and manufacturing, INEGI said.

Quintana Roo, which is heavily dependent on tourism, recorded the highest number of business closures as a percentage of total businesses. Over 46% of the businesses operating in the Caribbean coast state two years ago are now closed.

The only other state where more than 40% of businesses closed was Colima, where just under 42% didn’t survive the pandemic.

Nuevo León, Aguascalientes and Tabasco ranked third to fifth, respectively, with business “death” rates above 38%.

More than a quarter of businesses in every one of Mexico’s 32 states shut between May 2019 and July 2021, according to INEGI, but five states had closure rates below 30%. They were Chiapas, Oaxaca, Guerrero, Michoacán and Jalisco.

The closures caused significant job losses across the country.

With regard to the opening of new businesses, Hidalgo led the way. The number of business openings between May 2019 and July 2021 was equivalent to 36% of all Hidalgo businesses counted in INEGI’s 2019 economic census. Openings almost offset closures in Hidalgo, where the business “death” rate was 38%.

The next best performing states were Puebla, Tlaxcala, Aguascalientes and México state. The number of openings in each of those states was equivalent to more than 30% of total businesses counted in May 2019. On a national level, the number of business openings was equivalent to 24% of all businesses counted in 2019.

The best performing sector for openings was retail, which accounted for 27% of all new businesses created in the 27-month period to July 2021.

With reports from Milenio

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