How swine flu is infecting Mexico's economy

ECONOMIST: TRADITIONAL May Day rallies have been cancelled in Mexico as the country begins a five-day suspension of “non-essential” activities. The president, Felipe Calderón, has called off (or put behind closed doors) sporting events and concerts, ordered the closure of bars and nightclubs, and introduced general measures to keep people apart, from Friday May 1st to May 5th, in the latest effort to tackle the spread of swine flu. The order seems irrelevant: in Mexico City, the capital, residents have been staying inside anyway for much of the past week, and schools have been closed for several days. One estimate suggests that, as a result, the city’s retail and service industries are losing at least $55m a day.

Just what the economic impact of swine flu will be on Mexico is becoming clearer. A ban on restaurants seating customers is likely to double the cost to the city’s businesses. The capital accounts for roughly a fifth of national GDP (and similar measures are affecting other parts of the country). Financial markets have reacted. Since the emergency began on April 24th the local stockmarket has fallen by 3% (led by a 15% slide in an airport operator, Grupo Aeroportuario del Pacifico). The local currency, the peso, has dipped by about 4% against the dollar, although it recovered slightly on May 1st in response to news that the Inter-American Development Bank would lend the country $3 billion to combat the flu and the economic crisis.