Monthly Passenger Traffic on the Mexican Caribbean
Cozumel is the world’s most popular cruise ship destination. In 2019, the island welcomed in excess of 4.5 million passengers. With the COVID-19 pandemic spreading across the globe, the cruise industry ran hard aground in mid-March of last year putting total registered cruise arrivals of passengers to Cozumel at only 1.1 million in 2020, a 75% YoY decrease.
In the case of air travel, passenger traffic to and from vacation destinations such as Cancun rebounded in the second half of the year (in December 2020, CUN airport utilization stood 36% below its level a year earlier). For cruise ship ports, however, the crisis continues unabated, with not a single ship mooring to docks on the Mexican Caribbean over the last 10 months.
Total Confirmed COVID-19 Deaths per Million Residents
Over the last month and a half, the COVID-19 pandemic has wreaked havoc in South Texas. The county of Hidalgo, whose seat of government is located just 160 miles from Monterrey, Nuevo Léon (pop. 4.7 million), has seen 999 deaths attributable to COVID-19 thru August 18th.
On a per capita basis, Hidalgo County, TX has accumulated 1,134 deaths per million residents. This metric is at a level 3.5 times of the one observed in the state of Nuevo León, Mexico.
The comparison in death rates is quite unfavorable to the US if one additionally considers that Mexico has a GDP of 20,703 USD/capita, 32% of the 65,127USD/capita estimated by the OECD for its neighbor to the north.
Daily COVID-19 Deaths per Million Residents as of July 24th
Seven-day trailing average by number of days since 3 average daily deaths first recorded (date of such occurrence in parenthesis)
The highest COVID-19 daily mortality rate yet recorded in a US metropolitan area is 61.7 deaths per million residents (New York City on April 20). Notwithstanding this, by July 24 the lethality of COVID-19 in the Big Apple had been brought down to 1.2 deaths per million New Yorkers.
Coincidentally enough, COVID-19 lethality also reached its peak on April 20 in New Orleans (31.7 deaths per million) and the city similarly managed to bring the pandemic under control to a level of 1.8 in the most recent statistic.
As it stands today, however, it is South Texas where COVID-19 is deadliest and the pandemic out of control. Out of 67 US metropolitan areas analyzed, it is the Rio Grande Valley (RGV), Laredo and Corpus Christi — all in the state of Texas — that rank at the top of the list in lethality (30.9, 18.1 and 15.5 deaths per million residents).
The two southernmost counties in Texas, Hidalgo and Cameron, are home to a population of 1.3 million. Both counties are defined as MSAs by the OMB under the names of McAllen-Edinburgh-Mission (Hidalgo County) and Brownsville-Harlingen (Cameron County).
Population in the area is 90% Hispanic and has close family and business ties to Mexican cities across the border such as Reynosa and Matamoros that house 1.4 million individuals.
Out of Texas’ 254 counties, poverty rates in Hidalgo and Cameron rank among the highest (29.3% vs. a statewide rate of 14.9%) and the region is a COVID-19 disaster.
What is happening on the northern bank of the Rio Grande does not bode well for the city of Monterrey (population 4.7 million), which is only 137 miles away and actively linked to the border for logistical and health service reasons.
On October 21, 2005, hurricane Wilma first made landfall on Mexico’s shores striking the island of Cozumel. The hurricane exited the Yucatán Peninsula into the Gulf of Mexico on October 23 and a day later struck Florida.
Wilma is the most intense hurricane ever recorded in the Atlantic Ocean and — causing damages to the tune of 1,752 million USD — became the most expensive insured event in the history of Latin America.
During the 4th quarter of 2005 CUN handled 1.2 million passengers, the lowest number in over two decades. This record has now been broken during the 2nd quarter of 2020 with the airport serving only 288 thousand passengers.
In addition to resulting in tens of thousands of deaths in Mexico, the COVID-19 pandemic has brought severe economic hardship to the door of millions who depend on international tourism for a livelihood and unfortunately there is no measure of demand stimulus available that can help the industry and region on the scale it needs.
IMSS (Instituto Mexicano del Seguro Social) is a government entity that provides health insurance and social security benefits to private-sector employees in Mexico. Line thickness is proportional to the region’s population
The tourism sector in Mexico is being very hard hit by the COVID-19 pandemic and economic hardship to the population serving visitors of international resort destinations like Cancún, Los Cabos and Puerto Vallarta will be greater in scale and longer-lasting than that experienced in any other industry-dependent region over the past two decades.
Private-sector employment registered by IMSS in the states of Quintana Roo and Baja California Sur — which had for decades outperformed in terms of job creation — slumped almost 20% in the month of May after a 97% YoY plunge in commercial airport traffic in CUN and SJD with no respite in sight.
For reference, formal employment in the states of Baja California and Chihuahua — where the export-led manufacturing hubs of Tijuana and Cd. Juárez are located — shrunk by almost 12% YoY in June 2009. This development was a byproduct of the financial crisis that momentarily brought the manufacturing sector in North America to its knees. In the motor vehicle industry, for instance, production in Mexico fell by 48% from June 2008 to 2009 but twelve months later, in 2010, unit output had rebounded to an all-time historical high for the month of June.
In the region comprised by Campeche and Tabasco — where crude oil production represented 66% of GDP in 2017 — IMSS-registered employment fell slightly more than 12% YoY in July 2016. The driver behind this drop was draconian budget cuts to Mexico’s national oil company, PEMEX, as crude oil export prices fell from a level of 96 USD/barrel in July 2014 to an average of 39 in July 2016 and then proceeded to recoup ground reaching 66 USD/barrel in July 2018.
COVID-19 Daily Deaths are reported as a 7-day trailing average
With COVID-19 deaths on the rise and fears that the worst is yet to come, Mexico is lifting the lockdown it initiated almost three months ago. The true toll of the pandemic in the country is likely to be higher due to underreported deaths.
Mexico’s approach to tackling COVID-19 has not prioritized testing, which for the 7-day period ending June 10th averaged 0.05 individuals tested per day per thousand inhabitants vs. 0.27 in South Korea. The country is also far behind in developing and deploying contact tracingcapabilities, a key tool in South Korea’s successful fight against the pandemic and a pillar of New York City’s plan to safely lift stay-at-home orders.
Is Mexico’s COVID-19 strategy too reliant on good luck and divine intervention?
In 2018 tourism accounted for 8.7% of Mexico’s GDP and earned the nation 22.4 billion USD in foreign currency income.
Being the gateway to one of the world’s best tourist destinations, the airport at Cancún (CUN) became Mexico’s second busiest after Mexico City’s (MEX). In 2019 CUN served 25.5 million passengers (16.5 million of them international). For reference, consider that the combined number of passengers handled by the airports in Guadalajara (GDL) and Monterrey (MTY) totaled 26.0 million the same year.
The World Travel & Tourism Council (WTTC) estimates that in 2018 46.8% Cancún’s GDP was directly related to travel and tourism. Among large cities dependent on travel and tourism, Cancún ranked only below Macau (50.3%) and above Marrakesh (30.6%) and Las Vegas (27.4%).
With the COVID-19 pandemic wreaking havoc on travel and tourism (passenger traffic for the months of April and May at CUN is down 97.4% from last year), the 1.7 million inhabitants of the state of Quintana Roo, where Cancún and the Mayan Riviera are located, are facing very serious economic hardship.
As the COVID-19 pandemic rapidly spreads across North America, Mexico has taken social distancing measures that have brought mobility down to levels resembling those of New York.
The future course of the pandemic, which is currently at the acceleration phase in Mexico, will critically depend on the country’s federal, state and local governments being capable agents in the spheres of public health and social welfare over the next few weeks.
