About 500,000 formal businesses could close in Mexico in the next six months due to the coronavirus-induced economic crisis, according to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).

Executive Secretary Alicia Bárcena said Thursday that businesses in the retail, wholesale, tourism, manufacturing, construction, services and cultural sectors are at the highest risk of being unable to survive the economic downturn.

Presenting a report on the economic impact of the coronavirus crisis in the region, Bárcena said that large-scale government support is needed to avoid the en masse closure of businesses and consequent job losses.

“Mexico has strategic companies that must be supported,” the ECLAC chief said, citing the flag carrier Aeroméxico as an example.

“Direct support must also be given to micro and small businesses,” Bárcena added.

The federal government has offered 25,000-peso (US $1,100) loans to small businesses and individuals, which Bárcena applauded, but the ECLAC chief said that a greater number of credits should be made available and that they should be repayable over three years because “the recovery won’t be quick.”

She also said the government should help struggling businesses pay employees’ salaries and provide direct payments to independent workers to help them weather the economic storm.

“The measures we are proposing … [are to] defend [strategic] capacities, protect jobs and protect trades,” Bárcena said.

“What is undoubtedly needed is a broad industrial policy directed at strategic sectors in Mexico,” she added.

ECLAC’s prediction that 500,000 businesses could be forced to close for good comes a week after a similar forecast from the bank BBVA.

The bank’s research division said that more than 600,000 formal and informal sector businesses are at risk of closing permanently due to the coronavirus pandemic.

Mexico is expected to suffer a deep recession in 2020 as the coronavirus case tally and death toll continues to climb.

One leading business group estimated a month ago that the measures put in place to limit the spread of the coronavirus had already cost the commercial, services and tourism sectors at least 669.1 billion pesos (US $30 billion), while the national statistics agency Inegi reported last week that economic activity slumped almost 20% in April compared to the same month a year earlier.

Source: El Financiero (sp), La Jornada (sp)