Border region economy takes double hit


The Texas economy has already taken a double hit from a pandemic-driven recession and devastating oil bust. To those setbacks, add one more: a rapidly shrinking Mexican economy.

Few states are tied as closely to Mexico’s fortunes as Texas, which shares a 1,254 mile border and conducts some $300 billion a year in trade with its southern neighbor. Mexico is, by far, the state’s biggest export market, while the tens of thousands of Mexicans who cross into Texas each day to work, shop, and spend drive a border economy that supports hundreds of thousands of jobs.

Mexico’s economy has been battered by the coronavirus pandemic, adding to existing economic challenges such as widespread poverty that forecast a slow, painful recovery. The Mexican economy is expected to shrink by 12 percent this year — about triple the contraction projected in the United States — and grow less than 1 percent next year, according to Mexico’s central bank.

A man walks through an empty terminal at the George Bush Intercontinental in Houston, Texas in June 2020, during the coronavirus pandemic. Photo: Getty

“The thing we have to remember is that Texas and Mexico are joined at the hip economically,” said Tony Payan, the director of the Mexico Center at Rice University. “There is no reason to believe that Texas will not experience the crunch that it has in every other crisis that has happened in Mexico.”

The 2008 financial crisis provides an example. From July 2008 to January 2009, trade between the U.S. and Mexico fell $56 billion to $32 billion — a plunge of 43 percent in just six months, according to statistics from Mexico’s National Institute of Statistics and Geography. Mexico’s economy contracted at a 10 percent annualized rate in the fourth quarter of 2008.

The sharp downturn in Mexico’s economy and trade, meanwhile, contributed to the decline in economic activity in Texas, analysts said. Retail sales in the state fell 9 percent from 2008 to 2009 while the oil and gas industry’s output fell 16 percent, according to data from the Texas Comptroller.

Texas and Mexico’s economies have only become more intertwined over the past decade. For example, each $1 of products that Mexico exports contains about 40 cents of materials made in the United States — a share that is growing.

The Chihuahua Post