OECD Forum at Guadalajara International Book Fair 2020, 3 December 2020

 

Remarks by Angel Gurría, Secretary-General, OECD

Paris, France, 3 December 2020


Dear Secretary Alcalde, Rector Villanueva, Gabriela Ramos, friends,

I am very happy to be participating in this Forum on post-COVID reconstruction, organised as part of the Guadalajara International Book Fair.

A book fair in these challenging and complicated times is a literal breath of fresh air, an exercise in optimism and hope. Literature is one of the most important tools at our disposal when it comes to addressing and processing the challenges posed by the COVID-19 pandemic, but also to imagining and inspiring the construction of a better world.

COVID-19 has had a devastating impact

COVID-19 has had a tremendous effect on our societies and economies. To date, it has resulted in the deaths of almost one and half million people, with the total number of COVID-19 cases estimated to be around 64 million. And Mexico is one of the worst hit countries.

According to the OECD economic outlook, which we presented a few days ago, global GDP will shrink by 4.2% in 2020, before recovering at an average rate of 4.2% in 2021. In Mexico’s case, GDP will shrink by 9.2% this year, and bounce back by 3.6% in 2021. 

The global impact on jobs has been very significant. In just a few months, COVID-19 wiped out all the jobs created since the 2008 financial crisis, with unemployment in OECD countries increasing from 5% in February to almost 7.3% in September and unemployment among young people rising from 11% to over 14% in the same period.

Furthermore, the repercussions of COVID-19 have been much greater in the countries with the greatest social inequalities. The most vulnerable are paying the highest price, in terms of their health, their lives, and their jobs. This is very worrying in a country like Mexico, where nearly 78% of the population lives in poverty or a vulnerable situation, according to pre-COVID estimates by CONEVAL.

In order to address the huge challenge posed by COVID-19, one thing needs to be made crystal clear: choosing between lives and livelihoods is a false dilemma. I have been repeating this over and over in different forums. First and foremost, everything possible must be done to protect and save lives, which will in turn help mitigate the economic and social repercussions. And the only way to do this is to beat the virus. 

At the OECD, we estimate that it will take about a year, most of 2021, to reach levels of vaccine delivery and distribution that will put us in a safe situation. Therefore, in the coming months, we will have to continue fighting the virus with the tried and tests measures and precautions: testing, the temporary closure of some activities, face coverings, hand washing, social distancing, avoiding crowds.

It is therefore essential that governments strengthen their defence and combat strategies for COVID-19 while implementing their recovery strategies.

To continue fighting the virus, the OECD recommends moving forward in four parallel areas: 1) the use of testing, both rapid and PCR, plus test-track-trace; 2) antibody (serology) tests; 3) support for capacities to push back against the pandemic; and 4) a gradual lifting of restrictions, based on the three elements above.

At the same time, we have to start building back better. I am referring to the Triple B strategy (Build Back Better), with support focussed on programmes, investments and businesses that are promoting inclusion and sustainability.

In Mexico’s case, it is essential to strengthen efforts and measures to address the virus and protect the lives of Mexicans. The World Health Organization recently sent out a firm call to the Mexican authorities to strengthen these measures and reduce the very high rates of infection and deaths.

At the same time, reconstruction measures will have to be designed and implemented to turn recovery into a driving force for transforming and modernising the country. The budget for combating the virus and supporting small and medium enterprises, entrepreneurship and the creation of decent and well-paid jobs will have to be increased. And it will be crucial to take advantage of this reconstruction effort in Mexico to make progress in the country’s pending structural reforms.

Our recommendation is that Mexico focus on seven priority areas:

First, macroeconomic and financial policy. Efforts to increase government revenues, which represent only 16% of GDP compared to the OECD average of 34%, must be accompanied by a strategy to transform fiscal policy into an instrument of entrepreneurship, social protection and inclusion.

Second, strengthen the health system. COVID-19 has proved this. Mexico is urged to increase spending and investment in the health sector, which today has one of the lowest budgets in the OECD. Health expenditure in Mexico represents less than 6% of GDP, compared to an average of 9% in the OECD.

Third, strengthen social protection and welfare systems among the most vulnerable populations. This is fundamental, since in Mexico most workers operate in the informal sector and nearly 35% of the population lives in overcrowded conditions.

Fourth, restructure our economy to address climate change and protect the environment, biodiversity and health. Mexico must heed this warning, seize the moment to move forward in decarbonising its economy and accelerating its transition to renewable energies.

Fifth, strengthen our education systems. Education remains our Achilles' heel. We urgently need to improve teacher training, coverage and quality, remote education, and the school infrastructure.

Sixth, promote the use of digital technologies. We need to improve the connectivity and digital skills of the population, as only 64% is connected to the Internet and 40% of adults have very low levels of digital skills.

And seventh, strengthen support for businesses, especially SMEs. To this end, progress must be made in simplifying and standardising business regulations; programming cuts in working hours; and deferring tax, social security, income, debt and profit payments. 

Dear friends, 

The crisis we are facing is forcing us to think differently, to act differently. We are facing an unprecedented challenge, and at the same time a great opportunity to create a new economic system that works for everyone, a new social contract based on inclusion and sustainability, a new globalisation that is more harmonious, more humane, based on multilateral cooperation.

Mexico can count on our full support to design, develop and implement better policies for better lives.

Thank you.

 

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