May 22, 2020
1. Mexico begins to return to “new normal”
Last Monday, May 18th, Mexico began its economic reopening process with a progressive return to social and economic activities in the so-called “hope municipalities”, which have not registered cases of Covid-19. Currently Mexico registers 59,567 cumulative cases, 12,905 active cases and 6,510 deaths.
In addition, the Ministry of Tourism and the Ministry of Health presented the “National Guideline for the Reopening of the Tourism Sector”, which aims to resume activities for the sector, which contributes 8% of the national GDP. On the other hand, the State of Mexico and Mexico City presented their plans for the restart of economic activities. In the case of Mexico City, isolation is expected to continue at least until June 15, as it is one of the most affected areas by the pandemic.
2. Renewable energy companies are protected to continue their operation
After the National Center for Energy Control (Cenace) issued the “Agreement to ensure the efficiency, quality, reliability, continuity and safety of the National Electricity System”, that suspended the operations of wind and photovoltaic projects, several companies supported and achieved the favorable ruling that will allow at least 23 out of 44 renewable energy projects to resume.
The National Energy Control Center complied with the court ruling but assured it will challenge the protections promoted against the agreement. President Andrés Manuel López Obrador assured that the agreement promoted by the Cenace does not imply a “nationalization” of the electricity industry, rather a restructuring of the sector that prioritizes the national interest.
3. Foreign Direct Investment increases 1.7% in the first quarter of the year
This week, the federal executive branch published an agreement The Secretary of the Economy released the preliminary foreign direct investment figures for the first quarter of 2020, amounting to USD$10 billion, representing a growth of 1.7% compared to the same period last year.
The sector of the economy that received the most Foreign Direct Investment was manufacturing, which accounts for 44% of the investment flow, while the country with the most foreign direct investment contributed was the United States with 39%. The United Nations Conference on Trade and Development (UNCTAD) expects foreign investment flows worldwide to decline by 30% to 40% in 2020 due to the Covid-19 crisis.
4. Public actors issue new proposals for economic recovery
This week, the Morena National Executive Committee of Morena, chaired by Alfonso Ramírez Cuéllar, issued the “Agreement of Unity and National Solidarity”, which proposes the construction of a welfare state through the debate of an agenda of structural transformations, including a progressive tax reform and the measurement of the concentration of wealth, among others.
On the other hand, the Confederation of the Mexican Republic called on the Federal Government to be added to the proposal for the “solidarity wage”, that would require the government to assume the payment of 50% of the workers’ wages during the economic emergency. Meanwhile, various opposition parties have discussed the possibility of implementing a minimum living wage.
El Economista: Plantea Morena un Acuerdo de solidaridad nacional
5. Mexico may lose investment grade in 2022
According to a Bank of America survey for directors of investment funds, 75% of respondents anticipate the possibility of Mexico losing its investment grade by the beginning of 2022.
The Investment Fund directors agree that among the factors that will influence the cut to the country’s investment grade are mainly: the uncertainty of government policies and the lack of fiscal incentives in the face of the economic crisis caused by the Covid-19 pandemic.
El Financiero: México perdería grado de inversión a más tardar en 2022