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The loss of formal jobs in Mexico due to the COVID-19 pandemic will be more evident in manufacturing and tourism sectors, and the recovery will be prolonged, the credit rating agency Moody’s Investors Service said on Thursday.

In a report on Mexico, the U.S.-based agency indicated that despite signs of rebound in jobs, the recovery will be slow due to the COVID-19 pandemic compounded with a decline in formal employment initiated back in 2018.

“The loss of formal jobs will be more evident in manufacturing and tourism, and will further hurt demand for other consumer-dependent sectors such as housing and consumer durables,” said Moody’s Senior Vice President Gersan Zurita.

“While work resumption and the recovery of the U.S. economy will benefit manufacturing, tourism is unlikely to recover until an effective vaccine or treatment for the virus is widely available,” added Zurita.

Given the relatively small size of the country’s workforce compared to the total population, low employment rate will hurt Mexican productivity as well as household income, the report said.

The rating agency pointed out that Mexico is the second-most populous country in Latin America after Brazil, with around 126 million inhabitants, but the formal workforce is only 36 percent of the population.

The loss of jobs in Mexico will also have a negative effect on tax collection. As employment will not return to pre-crisis levels in the medium term, tax collection is estimated to fall by 1-14 percent in 2020.

Mexican President Andres Manuel Lopez Obrador estimated that the country will lose 1 million jobs in 2020 due to the pandemic, but his administration is looking for ways to generate up to 2 million new jobs.

The International Monetary Fund predicted a 10.5 percent plunge for Mexico’s economy in 2020 due to the COVID-19 pandemic.

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