Businesses are bracing for an economic downturn this year. In a data comparison done by a news network, they found that in contrast to the same period last year, the economy this year shrank by 2.4% in the first quarter.

According to analysts from Citibanamaex, Mexico's economy has contracted by 6.7% since the World Health Organization announced that the coronavirus has turned into a pandemic. They believed this contraction was deeper than that of the Tequila Crisis in the 1990s.


Loans for Small and Family-Run Businesses

Director of the Mexican Social Security Institute Zoé Robledo said that 40,255 loans are transferred to small business owners to support their employees financially. These amounted to 25,000 pesos each.

Robledo said on Wednesday that the IMSS would distribute over 642,000 loans to businesses who have made commitments to paying in full salaries of the employees in their workforce. Currently, more than 97,000 loan applications have been approved by the institute.

On Wednesday as a separate announcement, Economy Minister Graciela Márquez said that her department had approved 577,916 loans reserved for family businesses that were forced to close due to the economic crisis caused by the pandemic.

In order to become classified as a family business, the workforce must be comprised of members of the owner's family. Family-run businesses in urban cities will expect a distribution of 1 million loans from the Economy Ministry.

Marquez said that the loans would be transferred to the bank accounts of the respective businesses as soon as May 4. The loans are worth 25 pesos each. In addition, these are repayable in three years following the rate of the Bank of México.


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SMEs Affected by Both Coronavirus and Federal Austerity Measures

An estimated19,440 businesses provide goods and services to the Mexica government, and over 17,000 of these are small and medium-sized businesses. They are greatly affected by the new bill proposed by President Andres Manuel Lopez Obrador.

He aimed to save the national budget by cutting off spending by 75%, which was supposed to be directed towards financially supporting general services that are operated by micro to medium-sized enterprises.

The economic downturn expected at the end of 2020 may be enough to put their businesses down, and the austerity measures brought by are far from helpful.

In a report by La Jornada, a researcher at the National Autonomous University Violeta Rodríguez del Villar said that the Lopez Obrador administration should "diversify" their monetary aid to bolster healthcare and boost the economy at the same time.

Both the Inter-American Development Bank and the Mexican Business Council made announcements about their collaboration on the development of a program that will provide loans to micro, small, and medium-sized enterprises.

James Salazar, an analyst at CI Banco, said that Lopez Obrador's austerity measures would not be enough to save businesses, especially since Mexico's economy was expected to contract by the end of the year.

He added that support measures must be more concentrated, "considering there are sectors that are badly [affected]."