December 10th, 2021
1. Gradual economic recovery by 2022
In 2020, the Mexican economy contracted 8.2%. The Bank of Mexico (Banxico) expects 2021’s growth rate to reach 5.4%, and 3.2% in 2022. The Governor of Banxico, Alejandro Díaz de León, stated that he expects to see slowly recovering global financial conditions, prolonged weak domestic consumption and investment, and higher sovereign risk premiums.
The National Institute of Statistics and Geography (Inegi) revealed that the annual National Consumer Price Index (INPC) rose to 7.37% during November, a figure higher than the 7.25% forecast the previous month. Inflation grew for its ninth consecutive month outside the target range set by Banco de México—its highest level since 2001.
2. IP backs government action to protect auto industry
Private sector interests expressed support for the Economic Ministry’s actions to guarantee the rights of Mexican businesses should the United States approve an electric vehicle tax credit. The potential impact on Mexico’s national economy poses a risk to a quarter of national exports and changes compliance dynamics within the Agreement between Mexico, the United States, and Canada (TMEC).
Mexico exports 68% of its automobile production to the United States, so this incentive would place Mexican exports at a disadvantage compared to United States vehicles. In addition, the sector faces a shortage of semiconductors and a gradual economic recovery with the lowest domestic consumption in more than a decade.
3. INAI will challenge the presidential agreement
The National Institute of Transparency’s Access to Information and Protection of Personal Data (INAI) plenary agreed to present a constitutional challenge to President Andrés Manuel López Obrador’s decree that classified government work as a matter of national security. The decree blocks account and information searches of key construction projects.
The document covers communications, telecommunications, customs, border, water, environment, tourism, health, railways, energy, port, and airport infrastructure projects.
4. Consumer goods will not be subjected to a VAT in 2022
The 2022 Economic Package approved by Congress stipulated that some products will not be subjected to a Value Added Tax (VAT). Others will be exempt from paying 16% of the tax.
These goods include feminine hygiene products such as sanitary napkins and menstrual cups; pet food; and agricultural products, including tractors, plows, cultivators, and harvesters, among others.
Dinero en Imagen: ¿Qué productos estarán exentos de IVA en 2022?
5. Mexico maintains high levels of child poverty
In Mexico, children make up 39% of the population living in poverty—significantly higher than the 25% average among Organization for Economic Cooperation and Development (OECD) countries. According to a recent report, Mexican children have low access to basic services such as education and health.
Grainne Dirwan, policy expert at the OECD Center for Well-being, Inclusion, Sustainability, and Equal Opportunities, stated that children’s high levels of inequality produce low social mobility. He recommended creating public policies to combat child poverty in the region.