Economies around the world have been greatly affected by the coronavirus pandemic. In the United States, we saw a contraction in GDP of 9. 5% compared to the last quarter, ending the economic boom of recent years. this year and Japan’s is expected to shrink by a percentage.
Governments around the world have great and faithful monetary resources to keep their economies afloat in the face of both exogenous and endogenous threats; in doing so, they have inflated their national debts, but they have a much greater chance of temporarily coming out of the crisis. , the Congressional Budget Office recently announced that new government spending, compared to 79% last year, will make US government debt a big one. America exceeds the duration of the U. S. economy. As a total in 2021.
Mexico is an atypical case, like other countries, it has been greatly affected by the pandemic with more than 76,000 deaths, a figure that some experts say is expected to multiply several times, given the lack of widespread information. at the time of the 2020 quarter, and conservative estimates expect a 10% or more fall in GDP for the year, which means the disappearance of $1 in 10 from domestic production by 2020. More than 12 million jobs have lost since the start of the pandemic, and July brought a sharp recovery in employment data, now 5. 5 million more standing than in March.
President Andrés Manuel López Obrador, known as AMLO, refused to devote himself to emergency stimulus expenses, who prefer instead to stick to his mantra of fiscal conservatism or, as he calls it, “republican austerity”. investors to desperately inject the resources they desperately want into their economies, AMLO turned out that we decided to expel capital by weakening establishments and reducing investor confidence.
AMLO’s deastrous control over the Mexican economy meant that even before the start of COVID-19, the country was in trouble, with five consecutive quarters of economic contraction, at a time when Mexico has reaped the fruits of a new flexible industrial agreement with the United States and Canada, a booming U. S. economy, and a looming industrial war between the United States and China , AMLO has managed to end an era of slow but stable growth.
According to Valeria Moy of the Mexican Institute for Competitiveness (IMCO), estimates subsidized through the Central Bank of Mexico, the economy is unlikely to return to expansion before 2022 and GDP will not return to 2019 grades by 2032, i. e. a decade of expansion has been lost.
Although Washington’s specialty is, of course, the upcoming U. S. election, COVID-19, and the national economy, it can no longer be forgotten about Mexico’s economic catastrophe. Events south of the border are expected to be vital to the United States for a variety of situations. Reasons.
First, we want to take a look at the effects on migration. Shannon K. O’Neill of the Council on Foreign Relations recently wrote about the consequences of immigration to the United States in the event of Mexico’s economic collapse, saying that more and more Mexican migrants are heading to the southwestern border of the United States at a time when migration to Central America has declined and Mexico is expected to gain advantages from its demographic profile in conversion.
This factor, previously discussed at the height of bilateral diplomacy, threatens to become a cross-factor before the November elections. The growing number of Mexicans arriving at the southwest border will increase as the Mexican government is with fewer and fewer tax gains to inject. In their social programs. To put this in perspective, the number of migrants arrested along the U. S. border with Mexico more than doubled between April and July, according to U. S. government figures.
Second, the recession in Mexico will have a rapid economic effect on the US economy. But it’s not the first time The integration of U. S. economies is a major integration of the US economy. But it’s not the first time And Mexico over the more than 3 decades has been impressive: Mexico overca overcavised China this year to become America’s largest trading partner. But it’s not the first time Unlike China, Mexico has become a major importer of U. S. products, and this market is now worryingly fragile in the face of the economic crisis. A decline in exports to Mexico will damage the interests of the United States and exacerbate the prevailing rhetoric about the duration of the industry. Deficits.
Third, a weaker economy and higher unemployment rates will actually mean that more young men and women will turn to organized crime to meet their needs. The AMLO administration, like its predecessors, has proven to be incredibly useless in controlling organized crime violence: homicides have cost more. More than 35,500 lives in 2019 – and that of drugs to the United States. To address these problems, Mexican cartels are investing heavily in the progression of the national intake of illegal narcotics, as US border controls and the pandemic have confusing access to the US market.
After two years in power, AMLO has yet to outline a public security strategy for the country, has rhetorically put its hopes into a technique of social progression to reduce crime and violence. The collapse of the economy and the social protection network already undermines this. problematic effort.
In short, the mixing of these 3 points means that whoever wins the November election will be forced to take into account a much more active technique in bilateral relations with Mexico. For the United States, it is vital that Mexico does not fall into the economy. and currency crises as it has in the past. AMLO’s commitment to fiscal austerity would possibly be an idea to help prevent this from happening, but it is its forgetfulness of the country’s basic macroeconomic principles and the urgent desires of investors and the business network that can precipitate a scenario in which the United States will have to inject an emergency budget into its main trading partner.
It is fair to say that no one north or south of the Rio Grande will see a repeat of the 1994 peso crisis or the next bailout of the Mexican economy through Clinton’s management in 1995. It would potentially save billions of dollars to North America now, and years of expansion afterwards.
Duncan Wood is the director of the Wilson Center Institute in Mexico City.
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