Mexico unemployment: Banxico records 700,000 job losses in Mexico

The Mexican economy lost 700,000 formal jobs until April amid the uncertainty of the coronavirus crisis and "lack of confidence" derived from public policies, said this Tuesday a minute of the Board of Governors of the Bank of Mexico (Banxico).

Unemployment: Mexican economy lost 700,000 formal jobs until April amid the uncertainty of the coronavirus crisis
Unemployment: Mexican economy lost 700,000 formal jobs until April amid the uncertainty of the coronavirus crisis

In the report, one of the board members noted that automotive production fell 24% annual rate in March, which anticipates a contraction of up to 34% annual in manufacturing activity in the second quarter, in addition to "a severe weakening in the service sector.

"The main danger we face is a loss of jobs in the short term that will not be able to recover in the medium term, condemning a proportion of the population to a situation of structural poverty," warned one of the members of Banxico.

The minutes, just published, correspond to the last meeting on monetary policy on April 21, when Banxico lowered the interest rate to 6% and announced additional measures of $750 billion pesos ($31.4 billion dollars) to provide liquidity to the financial system.

This is one of the measures Mexico has to face the economic crisis of the coronavirus, which has caused 24,905 infections and 2,271 deaths in the country.

Faced with this scenario, all members of the central bank agreed that "a major contraction is anticipated" of the economy in the first half of the year, although "the magnitude and duration of the effects of the pandemic are still unknown.

Just this Monday, private sector specialists consulted by Banxico predicted a 7.27% drop in GDP in 2020.

Most of the members of the Governing Board warned that "idiosyncratic factors" have "aggravated" the "adverse" environment faced by Mexico due to the pandemic and the global fall in oil prices.

"Some noted that external shocks aggravated a problem that had already been brewing, which was mainly the result of the lack of confidence resulting from public policy decisions, as well as the deterioration of the rule of law," the minutes stated.

Most of the members, according to the report, also agreed that "in this environment, it is important to generate public policies that provide certainty for private investment.

For this reason, they "showed concern" about the insecurity, which translates into "an environment that is not conducive to investment.

One added that the effects of the pandemic could worsen if the economic policies to mitigate them are insufficient. Some commented that there is uncertainty about the strength of the recovery when it begins, the minister said.

By Mexicanist