Sunday, June 16, 2024

Mexico shaping up as one of worst health and economic casualties of virus

Mexico has surpassed its “catastrophic” worst-case scenario of 60,000 Covid-19 deaths and is shaping up as one of the worst health and economic casualties of the global pandemic.

Latin America’s second-biggest economy, which has the world’s third highest overall coronavirus death toll, hit the grim milestone on Saturday, when the health ministry reported 60,254 fatalities and 556,216 confirmed cases.

But officials have long acknowledged that the government’s data is an underrepresentation and the health ministry and private studies say the real death tally could be some three times higher.

Hugo López-Gatell, the deputy health minister who is in charge of Mexico’s Covid-19 strategy, predicted in June that 30,000 to 35,000 people could die and “in a very catastrophic scenario [the death toll] could reach 60,000.”

Meanwhile, the government refuses to countenance more than a shoestring stimulus policy for fear of derailing President López Obrador’s austerity pledges. With spending focused on pet infrastructure projects rather than helping the economy weather an expected 10% crash in 2020, economists fear GDP per capita will be set back a dozen years.

Eduardo González-Pier, a former deputy health minister, told a webinar organized by the think tank the Wilson Center the government’s response had been “improvised.”

Mexican authorities deliver upbeat assessments, saying cases and deaths are rising at a steadily lower clip and hospitals are far from being overrun.

But Sandra López-León, a Mexican epidemiologist in New York, said that if the current death toll were three times higher than reported, as feared, it would amount to a per capita rate of more than 1,394 cases per million inhabitants. That would put Mexico far ahead of the current worst-hit country on a per capita basis, Belgium, which has nearly 870 deaths per million inhabitants and does not appear to be underestimating deaths to such an extent.

Statistics are slippery given that “every country in the world is under-reporting Covid deaths and excess mortality,” according to Ali Mokdad, a professor of health metrics sciences at the Institute for Health Metrics and Evaluation (IMHE) at the University of Washington.

Mexico’s reopening of the economy — the capital city is allowing theaters to resume performances with limited audiences from this week on — could fuel a rise in Covid deaths. The IHME’s current projection is for 130,387 deaths by December 1, soaring to over 175,500 if restrictions are scrapped.

“In Mexico, my concern is that they will run out of ICU beds and ventilators — we predict by mid-November they will have run out if things keep going at the current rate,” Mokdad said. “Without a two-week lockdown I don’t see a way to control the pandemic in Mexico right now.”

Jaime Sepúlveda, an epidemiologist and executive director at the University of California San Francisco Institute for Global Health Sciences, called it “a dangerous bet” to start reopening while transmission is still rife.

Mexico has deliberately chosen not to attempt to count all cases and to limit testing — just 1.26 million tests have been officially recorded to date.

But the prevalence of the virus is borne out by the fact that 62% of tests are coming back positive, according to Our World in Data, a website that tracks the pandemic, well above other hard-hit nations.

The government has pushed ahead with economic reopening as millions in the vast informal sector have no choice but to keep working. At the same time stimulus measures have been largely limited to tiny loans for small businesses.

However, public spending is already up nearly 5% this year, even without a fiscal stimulus — well above the government’s expectation of a 0.7% rise, the Bank of America wrote in a note to clients, and has outstripped wage and other cuts.

López Obrador has refused countercyclical policies, saying Mexico cannot afford to take on debt. But with the cratering economy, the proportion of debt to GDP is rising anyway.

“We expect the current fiscal policy to drive the primary balance to minus 3.6% of GDP from 1.1% a year ago and debt to 60% of GDP from 45% in 2019,” the Bank of America said, adding that could prompt a sovereign downgrade to junk next year.

Valeria Moy, head of the Mexican Institute for Competitiveness, a think tank, said an official GDP proxy showed production at the same level as in September 2009 and investment was at 1995 levels.

“This is mind-blowing given the increases in population and economic activity,” she told the Wilson Center webinar, adding it would probably take until 2032 for GDP per capita to recover to 2019 levels, she added.

Mexico has at least stopped shedding jobs during the coronavirus crisis. But as Gabriela Siller, director of economic and financial research at Banco Base said: “The fact that we’ve touched bottom doesn’t mean that the crisis is over.”

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