I am the mother-in-law of Nick Josse, author of “365 days with my mother-in-law: boots in the field View of Barcelona’s economy.“This is my side of the story.
By Sylvie, Nick Josse’s stepmother for LOUP STREET:
I’m from Mexico and currently live in Barcelona with my daughter and Nick, although I plan to return to Mexico in the coming weeks. The prospect of boarding a plane terrifies me – far more than the flight I took from Mexico to Barcelona on March 5, 2020. I had no idea then that I was probably flying at the most dangerous time of all. the pandemic.
To my amazement, we are now at Day 390. I spent most of those days locked in a 170 square foot room. Four and a half of the five suitcases I brought from Mexico are still unpacked.
My original plan was to rent an apartment in Barcelona and sublet one of the rooms to short-stay Mexican visitors. I have visited my daughter and son-in-law in Barcelona for long periods of time, since my retirement over five years ago. I have taken a liking to this city. Unlike Mexico City, Barcelona is made for walking. I love strolling through the narrow cobbled streets of the Gothic Quarter and El Born. When I arrive at Barceloneta, I sit on the terrace of a cafe and contemplate the Mediterranean. Simple food washed down with Vermouth, a wary eye on my stuff – this is Barcelona after all !.
This time my stay was supposed to be permanent. To this end, I sold my beloved fourth floor apartment in Mexico City, overlooking a leafy park. It was my home for over 40 years, my pride and joy, the result of decades of hard work. But in 2017, I discovered, to my horror, that the city’s new seismic survey had identified my neighborhood as one of the most at risk for property damage in future earthquakes. My apartment had already survived two major tremors (1985 and 2017), having suffered only minor damage. I have friends who lost everything they owned in 1985. And insurance policies in Mexico don’t cover all the damage.
I decided to stop trying my luck and put my apartment up for sale. The money raised from the sale, along with the rental income generated by my apartment in Puebla, would provide enough funds to finance my move to Barcelona. At least that was the plan.
Almost all of the money was still in Mexican pesos, when the peso plunged 25% against the euro in the first five weeks of the coronavirus crisis.
The sale of my apartment was executed in pesos, and I intended to transfer at least half of the money in euros. I first needed to open an account in Barcelona. Once I did that I would be able to transfer funds from my Mexican account. But when I met my bank manager in Mexico, he failed to ask me to sign the main anti-money laundering papers. As a result, I was unable to transfer any money despite granting my niece a power of attorney before I left.
At that time, Spain was in lockdown. All I could do was watch the value of the money in my Mexican bank account plunge against the euro. Right now, renting my own studio in Barcelona is almost impossible, and sharing an apartment with someone else is also out of the question due to the pandemic.
So here I am, ready to go home. While part of me is excited about the prospect of returning to my homeland, I can’t help but worry about what I will find there.
Mexico has always been a land of ups and downs. In the lost decade of the 1980s, annual inflation exceeded 100%, wiping out the savings of much of the middle class. During the tequila crisis of 1994-1995, a sudden devaluation of the peso triggered a massive sale of Mexican assets. Amid the fallout, a chain of lenders collapsed. An IMF bailout was quickly staged to prevent chaos from spreading to Wall Street investment banks. Inflation was over 50%.
But the virus crisis, which is far from over in Mexico, could end up taking an even greater toll. The economy had already stopped growing before the arrival of Covid. Then last year, it suffered its worst crisis since the 1930s, falling 8.5%. This is worse than the worst year of the tequila crisis when the economy contracted 6.3%. It’s also worse than the worst year of the global financial crisis, 2009, when the economy shrank 5.1%. The virus crisis also devastated domestic consumption, which suffered its worst annual decline on record (-11%) – almost twice as much as in 2009 (-6%).
The Mexican government does not have the fiscal or monetary capacity to provide the type of financial support programs that have been put in place in more advanced economies. The government has resisted calls to shell out to prop up the economy, arguing (rightly) that bailouts tend to line the pockets of the rich. Instead, it has targeted most budget support programs on the most vulnerable segments of society. As a result, public debt has not increased as much as in other economies.
But it also means that Mexican companies have not benefited from the kind of support that, for example, the United States, France and Germany do. No government-backed emergency business loans, no grants, no vacation programs. Many businesses, especially small ones with little cash, have already collapsed.
My nephew who works in the construction industry in Puebla says that about one in three properties on the ground floor in town is currently vacant. Rents and property values are dropping sharply, he says. In Mexico City, 50% of office space and 70% of retail space in the 50-storey World Trade Center are empty.
The construction sector is in difficulty. In 2020, the sector’s activity fell by 17%. He was already in trouble before that. In January, it recorded its 31st consecutive month of decline in activity, according to INEGI. The first blow came from the reduction in civil works, due to the low investment in public infrastructure. New building construction kept the area afloat until the shutdown last year, and falling housing demand crippled activity. Today, the industry faces additional pressure from rising input costs.
The virus crisis has also exacerbated two of Mexico’s biggest problems: poverty and inequality. Even before Covid-19, almost half of Mexico City’s population was already living in poverty, according to the National Council for the Evaluation of Social Development Policies (CONEVAL). The pandemic further exacerbated a bad situation: some 63% of the country’s households saw their incomes drop during the worst months of the economic crisis in 2020. And schools were closed for 13 months.
Last year, remittances, mainly from the United States, helped cushion the shock for many families. This year, the hope is that Mexico’s exports to the United States and beyond will increase as the global recovery takes hold.
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