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Lockdowns that the city has endured have had a devastating economic cost

The capital of Mexico, Mexico City is still a long way from returning to normal, as the recovery from COVID-19 limps on 18 months from the first initial actions taken to protect the capital.

The capital is now functioning under the yellow traffic light of Mexico’s COVID-19 monitoring system which indicates a “medium” risk from the virus, and allows bars, restaurants and shops to open with safety measures while offices must enforce occupation caps. The city had enjoyed a short-lived period of green light status in June, meaning restrictions were completely removed, before it was returned to yellow and the implementation of partial restrictions, after cases rose again.

The lockdowns that the city has endured, where the death toll from COVID-19 approaches 40,000, have had a devastating economic cost. It has been reported that, as of March, the pandemic had claimed over one million MSME’s – roughly one in five businesses in Mexico – according to the 2020 Business Demographics Study by Mexico’s National Institute of Statistics and Geography (INEGI). 

Nearshore Americas reports that, at present, informal commerce buzzes at near-normal levels on the city’s streets but the gleaming towers that line the city’s major avenue, Reforma, as well as those that populate its financial centre in Santa Fe, remain sparsely empty and bereft of their usual activity.

Unlikely businesses will return to normal anytime soon

Schools may have returned for the new academic year, but it looks unlikely that businesses will be returning to normal in the immediate future. Earlier this month, the influential employers’ union, COPARMEX said the city’s economic recovery would take until the middle of 2023 at least.

Rodrigo Baz, founder and president of commercial real estate firm, Baz Advisory Group, explained that the capital still has a long way to go to recuperate its pre-pandemic business levels.

“I’d estimate that market activity is at about 50 per cent of pre-pandemic levels,” he told Nearshore Americas recently.

The pandemic has impacted players of different sectors of Mexico City’s knowledge service industry in diverse ways. In the immediate aftermath of lockdowns both in Mexico and abroad, demand for digital applications jumped dramatically.

Companies like Umvel, a software company based out of Mexico City, saw business jump, as global companies sought out their help in entering the digital sphere and sought software services.

Frank Van de Ven, the company’s co-founder and strategy director argues that, “business isn’t exploding quite as much as it was during the height of the pandemic because companies are slowly returning to usual, retail is opening and offices are opening, particularly in the US”.

Pivoting to fully remote work

However, the 18-month period of a near empty office in Condesa – only a few people who live close by and want to go into the office actually do. This has set Umvel on a path to fully remote work, De Ven explained. While the office will remain, employees will no longer be required to be there.

The onsite recruitment has been more difficult because people don’t want to come back to the office as yet. Aside from genuine health concerns, cutting out Mexico City’s particularly prolonged commutes are among the major reasons for disinterest in returning to the office.

According to Devpost’s Mexico City Mobility Hackathon, the average speed on the city’s roads is now just shy of seven mph, “around the same as in 1910 when horse-drawn carriages were still on the roads”.

Drivers waste 100 hours a year just sitting in traffic, the equivalent of 11 days of holiday, according to data-driven mobility company, SinTráfico. Work from home remains an attractive option. 

Vaccination going well in Mexico City

Latest figures report that 4,185,486 Mexico City residents are now fully vaccinated. The government’s strategy of vaccinating the elderly and most at-risk first means that 98 per cent of the population aged 60 or over are fully vaccinated.

Eighty nine per cent of 40 to 49 year olds are also double jabbed, figures drop sharply for all lower age groups. The average age of Mexico City residents is 35. With 30 to 35 year olds, only 35 per cent fully vaccinated, a large part of the working population likely remains without full protection.

The vast numbers of commuters who make their way into the city each day from the surrounding Valle De Mexico area, which includes State of Mexico and Hidalgo and Tlaxcala states, as well as parts of the state of Puebla, means that is it more difficult to know the true number of people in the city who are still without any protection against the virus.

Additional concerns on the standard of regulations that are in place throughout the city’s public and private spaces provide more reason for residents to question safety claims.

Carlos Vela, partner at Baker McKenzie Mexico law firm, is unconvinced by many of the regulations in place.

“Mexican authorities are not truly enforcing any health or labour controls related to the pandemic,” he told Nearshore Americas. 

Nightlife is booming in Mexico City

While the city’s formal workspaces are still quiet, nightlife is booming. This has been driven, in part, by the arrival of large numbers of US tourists eager to escape the often stricter limitations in the US. 

Though tourism provides welcome income to many of the city’s bars, restaurants and retailers, whether that tourism helps the city manage its virus situation is unclear.