Photo: El Periódico

By KELIN DILLON

More than a million businesses in Mexico, or one in five, were forced to permanently shutter their doors due to effects of the worldwide coronavirus pandemic, reported Mexico’s National Institute of Statistics and Geography (Inegi).

Of the 4.86 million businesses registered in the Inegi’s 2019 economic census, an estimated 3.85 million survived, while 1 million-odd businesses closed permanently and another 619,000 new enterprises were created, an 8.1 percent decline in total from 2019 to 2020.

“With the disappearance of these small and medium-sized establishments, we see a structural affectation that will make it very difficult for the economy to compensate because it means fewer companies, less investment and little capacity to generate jobs,” José Luis de la Cruz, director of the Institute for Industrial Development and Economic Growth (IDIC), told El Financiero.

The Inegi’s research found that most micro-businesses created during the pandemic only have two employees on their roster, down from the average of three reported in 2018. Small- and medium-sized businesses reportedly went from an average of around 29 employees in 2018 to 21 employed in 2020, or a cut of nearly eight workers on average.

“The ravages of the pandemic are historical, that compared to other economic crises, this seems more like a situation of destruction of capital,” said Carlos Hernández, analyst at Masari Casa de Bolsa. “We saw that about 20 percent of (small and medium businesses) were faced with total closure.” 

“Many establishments were not so consolidated and they did not have the resources to get ahead,” continued Hernández. “Possibly they were the ones that were more sensitive to the crisis.”

…March 24, 2021