Oscar Ferrara, USMEF regional director for Mexico, Central America and the Dominican Republic, provides the following update on the impact of this week’s earthquake in Mexico City:
Economic losses resulting from the Sept. 19 earthquake in Mexico City and other areas of central Mexico will require several weeks to quantify. Mexican analysts estimate that the negative impact on third-quarter GDP could reach up to 0.5 percent. However, the overall effect in the Mexican economy should be transitory. Mexico’s financial markets remained calm at the close of the week, and this was reflected in the exchange rate. The Mexican peso depreciated temporarily versus the U.S. dollar following the earthquake, with a spot price above 17.8 pesos per dollar, due mainly to speculation about the earthquake’s impact on the Mexican economy.
Mexico City, Puebla, Morelos, and the State of Mexico together account for 26 percent of the country’s GPD. This type of event usually causes a loss of production interrupting economic activity of the region at all levels for some period of time. At the macroeconomic level, the impact will be modest, but sectors such as hospitality and tourism could be more significantly impacted in the short run, according to local experts.
USMEF-Mexico does not anticipate a significant impact on agricultural trade between the U.S. and Mexico as a result of the earthquake. Residents are not as likely to eat at restaurants over the next several days, which will affect consumption for the rest of this month at a time when this sector is already entering the year’s low season. Hopefully consumption will pick up again, however, in time for the holiday season. Regarding the retail sector, we expect a temporary shift in meat consumption from higher-priced products to lower-priced products, due to reduced economic activity in affected areas and a weaker economic situation for lower-income families.
Based on information provided by the National Association of Self-Service Stores (ANTAD), 70 self-service stores in the region suffered damage but only 30 of them closed as a result of the earthquake. Similarly, most government agencies closed their facilities until at least Monday, Sept. 25, including SENASICA and COFREPIS headquarters. It is important to note, however, that these closures do not affect border operations. Although all administrative functions are suspended until Sept. 25 (for example: evaluating HRZs, updating plant lists, etc.), the border inspection points are operating normally.
As for USMEF’s Mexico City office, all staff members are safe and uninjured and the office has reopened following post-earthquake inspection. USMEF members contacting the Mexico City office may experience some short delays, but the staff will respond as quickly as possible.