16 months after the outbreak of the business closure crisis in Mexico due to the Covid-19 pandemic, as of July 2021 the number of economic units in the country did not show any reactivation, according to the Study on Business Demography ( EDN) 2021, published yesterday by the National Institute of Geography and Statistics.
Contrary to what happened with employment (which in July of this year was at a level already 2.6% above May 2019), to the cut of the seventh month of the year made by Inegi, the number of businesses in the country It was lower by almost 400,000 compared to May 2019, a reference point taken by the closing date of the 2019 Economic Censuses.
“The EDN 2021 (reference period: May 2019 to July 2021) gives continuity to the analytical scheme provided by the Study on Business Demography 2020 (EDN 2020- reference period: May 2019 to September 2020), the Economic Censuses 2019 and the study of this type carried out in 2012 ”, Inegi explained yesterday.
In May 2019, Inegi recorded the existence of four million 857,007 establishments, a figure that rose to four million 465,593 in September 2020, when the first edition of the EDN was held, to reach four million 460,247 businesses in July 2021, date of cut from EDN 2021.
That is, between May 2019 and July 2021, 396,760 fewer businesses were recorded, a figure that is equivalent to a drop of 8.2 percent.
The above results from settling a total of one million 583,930 economic units that disappeared in the period against one million 187,170 businesses that were born.
In proportional terms, the death of businesses represented 32.6% of the existing establishments before the pandemic, and the births were equivalent to 24.4%, that is, the mortality rate exceeded the birth rate by a considerable margin.
By size of establishment, the type most affected by the crisis to date is that of SMEs (11 to 250 employees in manufacturing and 11-100 employees in commerce and services), since their mortality rate in the last 27 months was of 21% versus a birth rate of only 6.4 percent.
Meanwhile, microenterprises had a 33% death rate, but a 25% birth rate, which means that their net death rate was lower.
Services suffer closures
By economic sector, the most affected is services, with a death rate of 38.2% and a birth rate of 24%, showing a wider gap than that observed in commerce (29.9% versus 27.1%, respectively) and in manufacturing (25.7% versus 15.9 percent).
“The 2019 Economic Censuses show that 99.8% of the country’s establishments are micro, small or medium. Due to their characteristics, these economic units tend to present greater changes with respect to large companies, in terms of income, employed personnel, location, closings and openings, among other aspects ”, Inegi recalled.
But he clarified that “coupled with this natural behavior, the health emergency derived from the Covid-19 pandemic led businesses to pause their activities or even close permanently.”
Last year, Mexico was one of the countries with the least public investment in stimuli to cushion the impact of the pandemic on business and consumption, with spending around 1% of GDP, versus 6% of the average for countries emerging countries, according to data from the Fiscal Monitor of the International Monetary Fund.
As entities, Hidalgo is the state that shows the highest number of new businesses, during 2021 with 31.88% births, while Quintana Roo remained the entity with the highest proportion of establishments that closed permanently (31.9% in 2020 and 46.6% in 2021) while Chiapas is the entity with the least closures, 13.7% in 2020 and 26.3% in 2021, respectively.
Reference-www.eleconomista.com.mx