Tuesday, November 26, 2013

Mexico's economic woes take a toll on Yucatán business

The White City has 45 less restaurants than a year ago, as recession hits hospitality sector hard

Mérida, Yucatán -
Innkeepers, restaurateurs and others in the hospitality industry in this capital city so heavily dependent on tourism won't be singing Auld Lang Syne with much enthusiasm 35 days from today. It has been a very difficult year for most, and yesterday a national restaurant association said the commercial challenges of 2013 have been the most severe members have seen since Mexico's economic crisis of 1994.

A federal government trade group, the Cámara Nacional de la Industria Restaurantera y Alimentos Condimentados (CANIRAC), reported that 45 Yucatán restaurants, almost all in Mérida, have closed their doors this year. CANIRAC attributes the problem to the downward spiraling Mexican economy, which - if it's lucky - is expected to grow just over 1% in 2013. Wal-Mart sales in free fall a good barometer of a Mexican economy on the skids.

Mexico's gross domestic product expanded by a solid 3.9% in 2012, and expectations were high for an encore this year. Peña Nieto: Mexico poised for 4% economic growth in 2013. But the numbers began plummeting in late spring and never recovered.

Last week the Hacienda, Mexico's federal tax collection and budget planning office, officially lowered its estimate of 2013 growth to 1.3%. Officials predicted the economy will roar back in 2014, but they offered few arguments in support of the rosy prognosis, and little reason for confidence at the tail end of what has been a very ugly year. The Hacienda's director, a key member of the PRI administration, admitted in August that growth has been "far below what Mexico needs" to address many pressing social needs. "Without sustained economic growth there will be no jobs, no way to fight poverty and no prosperity to share," said Luis Videgaray. Sluggish Mexican economy worries foreign investment experts.

Yesterday CANIRAC's local president noted that the restaurant industry is one of the first to feel the effects of a downturn in the economy. "We're living through a recession - that's what some experts claim, while others say no - but what's undeniable is that our sector is really suffering. December is not going to save us, as it has in the past, because the entire economy has been so weak all year."

CANIRAC has 400 members in Yucatán. Last year only 10 or 12 closed their doors. Even the 2008-2009 business cycle, when Mexico got a bad (and some say very undeserved) rap because of highly localized outbreaks of swine flu, presented less difficulties than this year has. Hostelries have not had an easy time, either. Yucatán tourism remained flat in first quarter of 2013.

Sept. 27 - Credit Suisse: storms will further reduce Mexican growth
Sept. 18 - Mexico is in full recession, say business executives
Aug. 31 - Bank of America Merrill Lynch: Mexico in huge economic hole; looming "risk of recession"
July 29 - Mexican Left lambasts poverty war: "a massive failure"
July 29 - 53.3 million - that's how many Mexicans live in poverty
June 21 - Banixco raises storm flag warning on Mexican economy
June 20 - Puerto Vallarta sweats through the dog days of summer
June 12 - 59% of Mexicans remain trapped in underclass
June 12 - As peso continues its slide, Peña Nieto puts a trillion of them on the table

© MGRR 2013. All rights reserved. This article may be cited or briefly quoted with proper attribution or a hyperlink, but not reproduced without permission.

No comments:

Post a Comment