I am the mother-in-law of Nick Corbishley, author of “365 Days with my Mother-in-Law: Boots on the Ground View of Barcelona’s Economy.” This is my side of the story.
By Sylvia, Nick Corbishley’s mother-in-law, for WOLF STREET:
I am from Mexico and currently live in Barcelona with my daughter and Nick, though I’m planning to head back to Mexico in the coming weeks. The prospect of boarding a plane terrifies me — much more so than the flight I boarded in Mexico for Barcelona, on March 5, 2020. I had no idea then that I was flying at arguably the most dangerous time during the whole pandemic.
Much to my amazement, we are now on Day 390. I have spent most of those days cooped up in a 170 square foot room. Four and a half of the five suitcases I brought with me from Mexico are still unpacked.
My original plan was to rent an apartment in Barcelona and sublet one of the rooms to short-stay visitors from Mexico. I have been visiting my daughter and son-in-law in Barcelona for extended periods, ever since my retirement over five years ago. I have grown fond of this city. Unlike Mexico City, Barcelona is made for walking. I love strolling the narrow cobbled lanes of the Gothic Quarter and El Born. When I reach Barceloneta I sit down on a cafe terrace and gaze out at the Med. Simple food washed down with Vermouth, a wary eye on my belongings — this is Barcelona after all!.
This time, my stay was supposed to be permanent. To that end, I sold my beloved fourth-floor apartment in Mexico City, overlooking a tree-studded park. It had been my home for over 40 years, my pride and joy, the fruit of decades of hard work. But in 2017, I discovered, to my horror, that the city’s new seismic study had identified my neighborhood as one of the most at risk of suffering material damage in future earthquakes. My apartment had already survived two big tremors (1985 and 2017), sustaining only minor damage in the process. I have friends who lost everything they owned in ’85. And insurance policies in Mexico don’t cover all of the damage.
I decided not to test my luck any longer and put my flat on the market. The money raised from the sale, together 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 by 25% against the euro in the first five weeks of the coronavirus crisis.
The sale of my flat was executed in pesos, and I had intended to move at least half of the money into euros. First I needed to open up an account in Barcelona. Once I had done that, I would be able to transfer funds from my Mexican account. But during my meeting with my bank manager in Mexico, he neglected to ask me to sign key anti-money laundering papers. As a result, I could not transfer any money despite granting my niece power of attorney before my departure.
By that time, Spain was in lockdown. All I could do was watch as the value of the money in my Mexican bank account plunged against the euro. By now, renting a studio apartment of my own in Barcelona is nigh-on impossible, and sharing an apartment with anyone else is also out of the question due to the pandemic.
So here I am, getting ready to fly back home. While part of me is excited about the prospect of returning to my native country, I can’t help but worry about what I will find there.
Mexico has always been a place of ups and downs. In the lost decade of the 1980s, annual inflation twice soared above 100%, wiping out the savings of a large part of the middle class. In the Tequila Crisis of 1994-5, a sudden devaluation of the peso sparked a massive sell-off of Mexican assets. Amidst the fallout, a string of lenders collapsed. An IMF bailout was quickly arranged to prevent the chaos from spreading to investment banks on Wall Street. Inflation was over 50%.
But the virus crisis, which is far from over in Mexico, could end up exacting an even greater toll. The economy had already stopped growing before Covid arrived. Then last year it suffered its worst slump since the 1930s, shrinking by 8.5%. That’s worse than the worst year of the Tequila Crisis when the economy contracted by 6.3%. It’s also worse than the worst year of the Global Financial Crisis, 2009, when the economy shrank by 5.1%. The virus crisis has also laid waste to domestic consumption which suffered its worst annual decline on record (-11%) — almost twice as large as in 2009 (-6%).
Mexico’s government does not have the fiscal or monetary capacity to provide the sort of financial support programs that have been rolled out in more advanced economies. The government has resisted calls to splash out to prop up the economy, arguing (quite rightly) that bailouts tend to line the pockets of the rich. Instead it has targeted most of the fiscal support programs at the most vulnerable segments of society. As a result, public debt has not soared as much as in other economies.
But it also means that Mexican companies have not enjoyed the kind of support that many companies in, say, the US, France and Germany have. No government-backed emergency business loans, no grants, no furlough programs. Many companies, in particular small ones with little cash, have already collapsed.
My nephew who works in the construction industry in Puebla says that roughly one out of every three street-level properties in the city are currently vacant. Both rents and the value of the properties are falling sharply, he says. In Mexico City, 50% of the office space and 70% of the retail space at the 50-floor World Trade Center are empty.
The construction industry is in trouble. In 2020 activity in the sector slumped 17%. It was already in trouble before then. This January, it registered its 31st straight month of falling activity, according to INEGI. The first blow came due to the reduction of civil works, due to the low investment in public infrastructure. Work on new buildings kept the sector afloat until last year’s lockdown and slump in housing demand brought activity to a standstill. Now the industry faces the added pressure of rising input costs.
The virus crisis has also exacerbated two of Mexico’s biggest problems: poverty and inequality. Even before Covid-19, almost half the population of Mexico City already lived in poverty, according to the National Council for the Evaluation of Social Development Policy (CONEVAL). The pandemic has made a bad situation even worse: some 63% of households in the country saw their income drop during the worst months of the economic crisis in 2020. And schools have been closed for 13 months.
Last year, remittances, mainly from the US, helped to cushion the blow for many families. This year the hope is that Mexico’s exports to the US and beyond will surge as a global recovery takes hold.
An optimist by nature, I would like to believe this will happen. But it’s hard to be optimistic when you’ve been living with Nick for the past 390 days. By Sylvia, Nick Corbishley’s mother-in-law, for WOLF STREET.
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