COVID-19

Mexico’s crumbling economy leads to border arrests, more COVID-19 fears

Andy Uhler Sep 10, 2020
Heard on: Marketplace Morning Report
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A sign with indications to cross to the United States near El Chaparral pedestrian crossing port in Tijuana, Mexico, on Sept. 1. Guillermo Arias/AFP via Getty Images
COVID-19

Mexico’s crumbling economy leads to border arrests, more COVID-19 fears

Andy Uhler Sep 10, 2020
A sign with indications to cross to the United States near El Chaparral pedestrian crossing port in Tijuana, Mexico, on Sept. 1. Guillermo Arias/AFP via Getty Images
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Border Patrol agents made 38,000 arrests along the southern border in July – up from 16,000 in April. Lots of those arrests are single adults from Mexico. A Border Patrol official said the increase is largely because his agency is quickly sending those single adults back across the border without detaining them – out of virus fears.

But, there’s also another reason for the boost in arrests: Mexico’s struggling economy. Even before Mexico’s first confirmed case of COVID-19 in February, Latin America’s second-largest economy was in a recession.

“To say that the Mexican economy is not doing well is a major understatement,” said Vanda Felbab-Brown at the Brookings Institution. She said over 34 million people are out of work and some 40% of the Mexican population lives in poverty.

Duncan Wood runs the Mexico Institute at the Wilson Center, and said things are getting worse. Economists predict the Mexican economy will shrink some 10% this year.

“Now, that’s huge. That’s, that’s more than one in 10 of every dollars of the Mexican economy is disappearing,” Wood said, adding that tourism generates more than 15% of Mexico’s GDP – and it has all but collapsed.

Andrés Manuel López Obrador, Mexico’s president, is also reluctant to inject government stimulus into the economy, which isn’t helping.

“During an intense, profound crisis, why wouldn’t you open the purse strings and use this as an opportunity to strengthen the economy so that people can stay employed, and that there is food on the table?” Wood said.

But because they can’t and there often isn’t, more Mexicans have been trying to cross the border for work, often without the proper documents.

“Unemployment has increased dramatically and people desperate for income to support their families are looking to go to the United States,” said Richard Feinberg, who teaches political science at the University of California San Diego.

Mexico is also struggling to stop the spread of the coronavirus. Vanda Felbab-Brown at Brookings said there’s limited access to testing and little opportunity to work remotely, especially for people who work in Mexico’s huge informal economy.

“Often, they don’t have any access to insurance or health care, and their livelihoods are precarious that necessitates that they work daily,” she said.

The COVID-19 official death toll in Mexico recently passed 60,000. Many suspect the true count is much higher.

COVID-19 Economy FAQs

Are people still waiting for unemployment payments?

Yes. There is no way to know exactly how many people have been waiting for months and are still not getting unemployment, because states do not have a good system in place for tracking that kind of data, according to Andrew Stettner of The Century Foundation. But by his own calculations, only about 60% of people who have applied for benefits are currently receiving them. That means there are millions still waiting. Read more here on what they are doing about it.

Are we going to see another wave of grocery store shortages?

Well, public health officials are warning that we could see a second wave of the virus before the end of the year. And this time retailers want to be prepared if there’s high demand for certain products. But they can’t rely totally on predictive modeling. People’s shopping habits have ebbed and flowed depending on the state of COVID-19 cases or lockdowns. So, grocers are going to have to trust their guts.

What’s going to happen to retailers, especially with the holiday shopping season approaching?

A report out Tuesday from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.

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