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Mexican authorities on Friday announced a reduction in the pandemic alert level for the capital and surrounding areas thanks to a fall in hospitalizations due to COVID-19.

Mexico City and the State of Mexico, together home to 22 million people, will move next week to orange status, the second highest of four under the country's traffic-light system.

Restrictions will remain on many non-essential activities as part of efforts to control the , which has killed more than 171,000 people nationwide—the world's third highest toll.

"We're going to reactivate without taking risks," Mexico City Mayor Claudia Sheinbaum told a news conference.

The declared it was moving to the highest-level red status on December 18 in the face of rising hospital admissions, allowing only essential activities.

The hospital occupancy rate for COVID-19 patients in the capital has since fallen from a peak of around 90 percent in January to almost 68 percent as of Thursday.

Gyms will be allowed to reopen next week with restricted hours and capacity, along with places of worship, but without .

Outdoor theater plays will be permitted and restaurant opening hours will be extended by one hour, though still only for outdoor dining.

Shopping malls were already allowed to reopen this week with strict sanitation measures.

According to the Mexico City authorities, the capital has registered 31,655 coronavirus deaths and more than half a million known infections.

January was the country's deadliest month of the pandemic yet in a surge that the government said was largely due to year-end social gatherings.