Flu likely to sicken Mexican economy
MEXICO CITY -- Lisandro Soto looks around the empty showroom at Durkin Chevrolet and watches pedestrians in face masks hurry by outside, trying to avoid the deadly swine flu virus that is paralyzing Mexico's economy.
Car-buying is the last thing on anyone's mind.
"Mexico was already having problems; this has just made it worse," the salesman said Wednesday. "And it's not just Mexico that is going to get hurt. If nobody is buying Chevrolets here, jobs up there (in the United States) are going to be affected, too."
Mexico's economy already has been clobbered this year by the global financial crisis and a wave of drug-related violence. Now economists worry that the flu outbreak could trigger a complete meltdown as shoppers stay home, restaurants close to prevent infection, tourism plummets, and workers deal with the cost of child care amid school closures ordered nationwide.
"The death toll of businesses could be much worse than the number of people who die from the flu," says Alejandro Álvarez Bejar, an economist with the World Economic Studies Network, a think tank based in Puebla, Mexico.
Mexico's central bank predicted Wednesday that the country's $880 billion economy could contract up to 4.8% this year, and that grim forecast doesn't take into account the flu outbreak.
That also means bad news for the U.S., which exported $151.5 billion in goods to Mexico last year — primarily cars, electronics, plastics, manufacturing machinery and petroleum products. Mexico is the second-largest customer of U.S. products after Canada.
Past economic upheavals in Mexico, such as the "Tequila crisis" in 1994-95, led to a large number of migrants crossing into the USA. In that crisis, the United States put together a $50 billion bailout package for Mexico. This time, Mexico has secured a $47 billion credit line from the International Monetary Fund.
In Mexico City alone, closures and cancellations are costing $57 million a day — about a third of the local economy, the city's Chamber of Commerce says.
Foreign travel restrictions continue to mount. France said it will ask the European Union to suspend all flights to Mexico. Argentina, Cuba and Ecuador also restricted air travel to or from Mexico. And several major cruise lines will keep their ships out of popular Mexican ports.
The U.S. Embassy is advising Americans living in Mexico to stockpile two weeks of food, water and medicine in case of shortages on the shelves.
At the food court in Perisur mall in Mexico City, tables and chairs are upside down, and the seating area is roped off. Signs tell customers that only takeout purchases are permitted. No lingering to eat — to prevent spreading the virus.
All 35,000 restaurants in this capital city of 20 million people have been ordered to close their dining rooms, allowing only takeout. Also closed: bars, movie theaters, museums, concerts, sporting events and archaeological sites.
To help waiters suddenly out of work, the Mexico City government will pay them nearly $4 a day.
Zenon Cuevas, manager of the Alpen House sandwich shop, says his customers dropped to 40 from 400 a day. He's now bracing for the worst on Friday, Mexico's Labor Day holiday.
"The office workers are going to be gone, and all the shoppers are going to be staying at home," he says. "This is going to hit us really hard."
Family-owned restaurants and other small employers may have to lay off workers within a week or go bankrupt, says Carlos Diaz de Leon Valdes of Mexico's National Association of Economists.
He says the flu outbreak is making Mexico's already-suffering economy worse: "It's like raining on something that is already soaked."
Hawley is Latin America correspondent for USA TODAY and The Arizona Republic