October 15th, 2021
1. Public finances may be balanced in 2022
Experts from the International Monetary Fund (IMF) project that Mexico will balance its public finances in 2022 or 2023, when it will recover from a 0.1% GDP deficit to a 0.2% GDP fiscal surplus. Among 40 emerging countries, Mexico stood out for a second consecutive year for having a deficit within 0.6% GDP of being balanced. In addition, the IMF called for implementation of “a conservative fiscal policy” to give the government the ability to follow through on its commitment to increase tax revenue.
However, members of the Governing Board of Banco de México (Banxico) affirmed that global inflationary pressures and production limitations will continue to affect consumer prices and economic sectors such as manufacturing.
2. Manufacturing at risk due to high costs and strikes
Mexican manufacturing has been impacted by changes in natural gas imports from the United States. Global natural gas price increases will affect Mexican productivity. Some companies such as Alfa, Grupo México, Industrias Peñoles, Pinfra, Grupo Carso, and IEnova could be affected by increases in gas prices. Additionally, North America is expected to experience an additional seasonal price increase in winter.
5,000 workers from the construction contractor ICA organized a strike at the Dos Bocas Refinery in Tabasco to demand better working conditions. This is the most serious labor problem faced by this project during the administration of President Andrés Manuel López Obrador. The project is almost complete, as it just lacks storage tanks and fuel treatment infrastructure.
3. Mexico-US border crossings are opening
The White House announced that it will open its land borders with Mexico and Canada in November and will require travelers to provide proof of vaccination. The United States will admit visitors who received any COVID-19 vaccine approved by the World Health Organization (WHO). During Vice President Kamala Harris’s last visit to Mexico, a working group was established to plan vaccinations in 45 border municipalities in coordination with the Government of President Andrés Manuel López Obrador.
The Secretary of Foreign Relations, Marcelo Ebrard, stated that vaccination rates increased in the last month and underscored close cooperation with the United States; a dynamic defined by the cooperation on migration and security issues. In addition, Mexican businesses approved of US authorities’ decision to reopen border crossing in cities such as Ciudad Juárez, Chihuahua, and El Paso, Texas, which had been closed since March 2020.
4. The Ministry of Labor will review current outsourcing plans
More than 174,000 new formal jobs were created in September after reforms eliminating outsourcing in Mexico came into force. This was the highest September figure recorded since 1997 and the highest figure for any month since October 2020, according to data from the Mexican Institute of Social Security (IMSS). In addition, in the third quarter of 2021, 139,846 jobs were created per month, a figure above average compared to the first and second quarters (83,992 and 49,890, respectively).
However, the Ministry of Labor and Social Welfare (STPS) recorded 7,923 instances of illegal outsourcing. Alejandro Salafranca, head of the Dignified Work Unit of the Secretariat, said that those companies will face legal consequences.
El Heraldo de México: Por outsourcing, detectan anomalías en 12% de las empresas.
5. Regularizing cars without registrations hurts the economy
President Andrés Manuel López Obrador will sign an agreement to regulate unreigstered used cars in Mexico. This will create a registry of users to which border state owners of these vehicles must register. The Employers’ Confederation of the Mexican Republic (Coparmex) indicated that the measure would increase crime in the seven northern border states and hurt the automotive industry and job creation in Mexico.
In the first quarter of 2021, 106,502 used cars were imported into Mexico, an increase of 35.7% compared to the same period in 2020 and the largest increase reported by the sector in eight years. The Mexican Association of Automotive Distributors (AMDA) stressed that the initiative will benefit organized crime syndicates that enrich themselves by smuggling used cars. Eventually, the president’s proposal will be applied throughout the country, which could produce more problems in the coming months