Mexico continues on austerity path amid pandemic

With more than 2.3 million confirmed cases and over 220,000 deaths, Mexico has the second-worst Covid-19 figures in Latin America, only surpassed by Brazil’s death toll of almost 426,000. While comparisons can be drawn between the two countries’ hands-off approaches to the health crisis, the way Brazil and Mexico have handled the economic effects of the pandemic differs greatly.

Brazil spent 8.8 percent of its GDP on financial aid during the pandemic, against the 0.7 percent forked out by Mexico — the lowest rate out of all Latin American countries.

President Andrés Manuel “AMLO” López Obrador argues that austerity will help Mexico reach a “much stronger macroeconomic and fiscal position” in the post-pandemic period, especially after seeing GDP plunge 8.2 percent last year. Lowering the country’s public debt — currently sitting at 60 percent of the GDP — is also playing on AMLO’s mind. 

Experts disagree with his strategy, claiming the government’s austerity plans will not avoid a massive deficit while also pushing extreme poverty rates up to 66.9 percent in 2020.

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