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GENERAL SITUATION IN MEXICO

Weekly Review # 84 I December 8, 2021

MANUFACTURING INDUSTRY EXPORTS FROM LATIN AMERICA AND THE CARIBBEAN TO GROW 25% IN 2021; MEXICO’S, 17%: ECLAC The value of exports of products from Latin America and the Caribbean would grow at an inter-annual rate of 25% in 2021, while the corresponding value of Mexico would climb 17%, ECLAC projected on Tuesday. In the same comparison, South America’s external sales would rise 34%, those of the Caribbean would advance 31%, and Central America would increase 24%. In general, countries that sell raw materials abroad have been favored by the high international prices of these goods, while those that export manufactured goods have been affected by the global shortage of semiconductor chips; both sides have faced logistical problems derived mainly from the COVID-19 pandemic. In its Outlook for International Trade in Latin America and the Caribbean, ECLAC projects that the increase in the value of regional goods exports for the year will be driven by a 17% rise in export prices and an 8% expansion in volume. The value of goods imports would increase 32% due to a 20% increase in volume and a 12% increase in prices. South America would register the largest increase in the value of exports in 2021 since, given its export specialization, it would benefit especially from higher commodity prices. A similar situation is observed in the Caribbean, which will benefit from the high prices of oil, gas, and bauxite exported by Guyana, Trinidad, and Tobago, and Jamaica, respectively. At the opposite end of the spectrum, the value of Mexican exports (which consist mostly of manufactured goods) will

SOURCE: El Economista

grow, driven mainly by volume expansion. A similar situation can be seen in the case of Central America. The value of imports would grow by more than 25% in all subregions and Mexico. Among the region’s main trading partners, the greatest dynamism in 2021 is projected for flows with Asia and within the region itself. The projected 35% increase in the value of exports to China is consistent with the structure of shipments to that country. These are composed almost exclusively of raw materials and processed natural resources, so their value is increasing due to the higher prices of these products.For its part, intraregional trade recovered in 2021 from a drop that began in February 2019 and abruptly deepened during the pandemic. Several manufacturing sectors, such as metalworking (83%), automotive (66%), and textiles, apparel, and footwear (54%), showed high year-on-year increases in intraregional shipments during the first half of the year.Nevertheless, the regional market’s share of total exports of goods would stand at 13% in 2021, far from its peak level of 21%, reached in 2008

MANUFACTURING INDUSTRY

THE NATIONAL COMMISSION OF MINIMUM WAGES (CONASAMI), AND THE SECRETARY OF LABOR HAVE OFFICIALLY ANNOUNCED THE APPROVAL OF AN INCREASE TO THE MINIMUM WAGE IN MEXICO OF 22% EFFECTIVE ON JANUARY 1, 2022. Last Wednesday, December 1st, the federal government, representatives of the labor sector, and employers organizations announced a 22% increase to the minimum wage in Mexico. MAIN CONSIDERATIONS: • The minimum wage applicable to the Northern Border Free Zone of $213.39 increases to $260.34. • The rest of the country’s current minimum salary of $141.70 will increase to $172.87. • Both salary increases include a tripartite agreement of a 9% increase plus an Independent Recovery Amount (MIR) in both zones. • The general percentage increase for both General and Professional Minimum Wages is 22%. • Salary increase on minimum wages are effective on January 1, 2022.

SOURCE: El Economista

GOOD NEWS MEXICO’S CAPITAL ROLLS OUT FIRST COVID-19 BOOSTER SHOTS Mexico City officials will begin offering a third COVID-19 vaccine dose to residents over the age of 60 on Tuesday; officials said, part of a government plan to roll out booster shots. President Andres Manuel Lopez Obrador said last week the third doses would be made available as soon as possible, beginning with elderly people who are more vulnerable to the coronavirus. The first booster shots in the massive capital of nearly 10 million people will be AstraZeneca doses given to residents of the southern Tlalpan neighborhood; officials told a news conference on Monday. To be eligible, people must have had two initial doses six months ago.

SOURCE: Reuters

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning Press Conference December 1-7, 2021 THIRD GOVERNMENT REPORT President Andres Manuel Lopez Obrador delivered a message on the occasion of the third year of the beginning of his administration. The head of the Federal Executive highlighted the progress made in the areas of social policy, economy, politics, and government. Some of the points he highlighted in his report are: • Fuel and electricity prices have not been increased in real terms. • Consolidated purchases of medicines in Mexico and abroad without intermediaries will continue • Reduction in crimes such as: fuel theft, homicides, vehicle theft, and kidnapping. • He highlighted the progress of its main programs such as Jóvenes Construyendo el Futuro and Sembrando Vida. • He referred to the creation of jobs with works such as the Mayan Train, the Dos Bocas Refinery, modernization of refineries and hydroelectric plants. • He commented that in these first three years, Mexico is a great nation, respectable and respected throughout the world. • He reported on the agreement reached between the labor-management sector and the government to increase the minimum wage by 22%. INCREASE IN THE MINIMUM WAGE The Secretary of Labor and Social Welfare, Luisa Maria Alcalde Lujan, mentioned that the increase in the minimum wage will be 22% in general as well as in the border-free zone, starting January 1, 2022, it will increase

SOURCE: https://www.youtube.com/channel/UCxEgOKuI-n-WOJaNcisHvSg

from 141 pesos per day to 172 pesos per day. In monthly terms, it will be an additional 948 pesos. It is the 4th consecutive increase and represents 71% of the purchasing power recovery. In the case of the border-free zone, it will increase from 213 pesos per day to 260 pesos per day. An increase of 1,428 pesos per month and a recovery of 160% of the purchasing power of the minimum wage. 6.3 million workers are expected to benefit, equivalent to 30% of those enrolled in Social Security. By 2022, Mexico will move up 13 positions to reach number 67 in the international minimum wage comparison. The Secretary commented that it is reaching the purchasing power it had in 1994. It will be enough for 10 kilos of tortilla by 2022; compared to 2018, it will be able to buy 3.5 kilos of tortilla more. OMICRON VARIANT President Lopez Obrador pointed out that it was proven that one person in Mexico is infected by the new variant. He emphasized that so far, there is no evidence that it is more dangerous, as there have been no reports of an increase in deaths. He affirmed that the government will reinforce vaccination since it is the most effective measure. In this sense, he pointed out that vaccines have to be given to stragglers, young people, and older adults. It is likely to start with the booster vaccination for senior citizens as of next Tuesday. He explained that a meeting will be held on Monday to define the vaccination plan. He pointed out that the Pfizer vaccine will be kept for young people since it is the one that is being recommended for this sector.

HEALTH Dr. Jorge Alcocer, Secretary of Health, released data on the purchases of medical supplies and inputs by the health sector, stating that 12,910,175 pieces are in transit for delivery in the next few days. Hugo Lopez Gatell, Undersecretary of Prevention and Health Promotion, announced that there had been a reduction in hospitalization rates. He informed that 183.9 million doses of the 7 vaccines being applied in Mexico had been received. He mentioned that to date, 83% of adults already have a complete vaccination schedule. He informed that the priority is the vaccination of those who have not received any doses, but the elements are in place to start the booster process in older adults. Astra-Zeneca will start with additional doses in all cases regardless of the first vaccination. In the next few days, the locations for the application of the boosters will be announced, beginning in the states of Chiapas, CDMX, Jalisco, Oaxaca, Sinaloa, and Yucatan. Foreign Minister Marcelo Ebrard informed that the doses of vaccines (almost 200 million) that the country has received will allow the application of the booster ordered by the President. For his part, the Secretary of Defense announced the actions for distributing the doses. The process of applying the booster doses formally began in Chiapas, where the governor of the state, Rutilo Escandón, was present and thanked the federal government for its efforts to apply the vaccines. Similarly, in Sinaloa, Governor Rubén Rocha Moya also thanked the state for being considered in this initial stage of booster application. The vaccination booster strategy for senior citizens also began in Yucatan and Mexico City. The head of government Claudia Sheinbaum reported the progress of the vaccination in the city and the beginning of the application of boosters. President López Obrador applied the booster dose. REMITTANCES The President thanked the arrival of remittances by Mexicans abroad, which amounted to 100 billion pesos this year, with 8 billion pesos destined to the state of Michoacán, and assured that this activity is the main source of income in the State, which benefits commerce and productive activities.

SOURCE: https://www.youtube.com/channel/UCxEgOKuI-n-WOJaNcisHvSg

DISTRIBUTION OF MEDICINES The President assured that 10 companies sold close to 100 billion pesos in low-quality medicines to the federal government, supported by corrupt politicians, which is why the new administration had to modify the law to buy medicines abroad. Finally, he informed that, just as the army supported the distribution of vaccines against COVID-19, the SEDENA will support the distribution of medicines. INFLATION President López Obrador indicated that the inflation phenomenon is worldwide. Inflation in Europe of an average of 5% had not been seen in the last 30 years, and in the United States, inflation is similar to Mexico’s at around 7%. In the case of Brazil, it is 11%. This is a consequence of the pandemic when production plants were closed and when they were reactivated, raw materials had very high prices. The amount of money injected into the United States economy to support its citizens and productive activity has also influenced, which generated a lot of demand and little supply. In Europe, they have decided not to take any action as they consider this phenomenon to be transitory. The President expects that in fuels and electricity, he hopes that competition will help to maintain prices. PRESIDENT’S AGENDA On Wednesday morning, he will be in Nayarit. He will announce a project for Tepic to become the handicraft capital. Thursday at noon, he will meet with the Mexican Business Council. Friday will be in Juarez, Chihuahua. Saturday will be with the security cabinet in Tijuana, Baja California. On Sunday, he will be in Baja California Sur at the salt mines company in Guerrero Negro and then to La Paz to a phosphoric rock mine. On December 12, there is no activity scheduled. If the State Government has already started the project for the introduction of water in Los Cris, Sonora, he will visit this state. Otherwise, he will visit until January 2022.

MEASURES TAKEN BY STATES IN MEXICO

BAJA CALIFORNIA The State of Baja California is considered medium-risk or yellow light this week. Official reports confirm that in the last 48 hours, there was a reduction in COVID-19 cases, reporting 2,862 active cases in the past 14 days and 66 new cases in the past 24 hours. The vaccination plan for adolescents aged 15 to 17 years continues this week with the application of the first dose of Pfizer in Mexicali, Tijuana, Rosarito, and San Felipe. And the vaccination plan to the adult population continues this week with the application of the first and second dose of Astra Zeneca in Tijuana, Rosarito, and Ensenada.

SONORA The State of Sonora is considered as medium-risk or yellow light. Official reports confirm 57 new cases in the last 24 hours. The vaccination plan for adolescents aged 15 to 17 years and the adult population continues this week in different municipalities. The health secretary of Sonora reminds the population about the protocols for work environments, such as disinfecting surfaces, use of antibacterial gel, healthy distance, the correct use of the mask, taking temperature, and not shaking hands.

MEASURES TAKEN BY STATES IN MEXICO

COAHUILA Given the imminent arrival in the Mexican territory of the new Omicron variant of the virus that causes COVID-19, Governor Miguel Angel Riquelme Solis mentioned that there wouldn’t be new restrictions that alter the citizens’ routine. TAMAULIPAS The Delegation of Social Programs in Tamaulipas will apply the third dose of vaccine against COVID-19 in adults over 60 years of age this week. NUEVO LEON At a press conference, the Secretary of Health in the entity explained that there will be changes in the COVID-19 indicators. Two of them will be replaced by the “COVID-19 vaccination coverage” and by the “Status that occurs in neighboring states.” With the elimination of the “Installed capacity for daily tests” and “Comparison of respiratory diseases,” the State Secretary of Health announced changes in the indicators of the Epidemiological Traffic Light of COVID-19.

MEASURES TAKEN BY STATES IN MEXICO

AGUASCALIENTES Through a press release, the delegation of Development Programs, headed by Nora Ruvalcaba Gamez, announced that on Wednesday, December 8, Thursday, December 9, and Friday, December 10, an Extraordinary Vaccination Day against COVID-19 will be held in Conurban Areas in which the first dose of the biological vaccine, in this case from AstraZeneca, will be applied to people over 18 years of age who for some reason have not been immunized. GUANAJUATO This weekend began in Guanajuato, the first day of vaccination against COVID-19 in adolescents between 15 and 17 years old. According to data issued by the Ministry of Health of Guanajuato (SSG), only in Leon, more than 47 thousand young people applied the Pfizer biologic between December 4 and 5. In the city of Leon, 90,360 people in this age range have been registered, of which more than 36,000 went for vaccination on Saturday, December 4, and 10,822 on Sunday, December 5. The vaccination will continue on Monday 6 and Tuesday 7 or until stocks are exhausted in the different municipalities of Guanajuato.

MEASURES TAKEN BY STATES IN MEXICO

QUERETARO Queretaro´s Organizational spokesman, Erick Ventura, indicated that a vaccination period is open for latecomers, valid until December 17 or until the Welfare Secretariat informs him, and reminded that the application of the first dose has already begun for adolescents between 15 and 17 years of age. He added that there will be a vaccination module for stragglers in the venues for vaccinating adolescents, except for the municipalities of the first health jurisdiction. He emphasized that more than 2.8 million vaccines have been administered in the state, so the vaccination goal for Queretaro could soon be reached.

JALISCO With data until December 6, Jalisco´s Ministry of Health reported 691 new cases of Covid-19 in the first days of December, so 397,394 people have fallen ill during these 20 months of the pandemic in the state, and 17,468 have lost their lives. In the last 24 hours, 166 new cases were reported and 16 deaths of Covid-19. According to the agency, the occupancy of general beds is over 10%, and in Intensive Care Unit beds, it is almost 14%. Currently, four hospitals are at 100% general hospital occupancy.

MEASURES TAKEN BY STATES IN MEXICO

STATE OF MEXICO Cases and deaths due to COVID-19 in the State of Mexico continue to decrease. According to official figures, in the last 24 hours, there were only 91 new positive cases and four deaths. In the previous cut-off on Sunday night, federal health authorities announced that to date, there are a total of 379,674 positive cases of COVID-19. Even though the State of Mexico is on a green epidemiological traffic light, authorities request that preventive measures be maintained amid the surge of the new Omicron variant.

CDMX Boosters arrived in CDMX. The third dose of AstraZeneca’s vaccine against COVID-19 will be administered starting this December 7 in the Tlalpan district. The booster will only be given to adults over 60 years of age. The other municipalities will soon receive a schedule, although it was not stated when.

ECONOMIC GROWTH IN MEXICO CONSTELLATION BRANDS TRUSTS IN MEXICO AND WILL BUILD A BREWERY IN SOUTHEASTERN MEXICO U.S. brewer Constellation Brands will build a brewery in southeastern Mexico following the controversial suspension of a previous million-dollar project in the country’s northwest, two sources familiar with the matter said Tuesday. However, the company noted that talks with the Mexican government are continuing. Riley Blevins, a spokesman for Constellation, explained that in recent months the firm has been working with officials on the long-term needs for beer production in southeastern Mexico, where there is ample water availability. “Discussions have been productive and are continuing,” Blevins responded in an email to a Reuters query about what sources said. Constellation Brands, which distributes Corona beer and other Grupo Modelo brands in the United States, was building a brewery in Mexicali, but a controversial referendum pushed by President Andres Manuel Lopez Obrador halted its plans in March last year because of water shortages in the area. The Wall Street Journal had reported earlier that Constellation Brands and Lopez Obrador are expected to announce the new project this week, which would involve an investment of US$1.3 billion, compared to US$1.4 billion for the canceled project. President Lopez Obrador said in May of this year that his government reached an agreement for the brewery to build a plant in the southeast of the country.

SOURCE: El Economista

The canceled plant was planned to start operations in 2021. The project was expected to generate close to 34,000 jobs (direct and indirect) and an amount of 294 million pesos per year in tax revenues. Constellation Brands is a U.S. company with operations in Mexico, New Zealand, Italy, and Canada. It is the third largest beer company in the United States, with import brands such as Corona, Modelo, and Pacifico.

TOWARDS THE “NEW NORMAL”

DISTRIBUTION OF DEATHS PER STATE DUE TO THE PANDEMIC

INFORMATION UPDATED ON DECEMBER 7, 2021 AT 19:00 HRS LOCAL TIME.

NEW CASES REPORTED: 752

SOURCE: https://www.gob.mx/salud/

CONFIRMED CASES: 3,902,015

NEW DEATHS REPORTED: 110

CONFIRMED DEATHS: 295,312

INCREASE OF CONFIRMED CASES SINCE THE FIRST REPORT MAP WITH THE DISTRIBUTION OF THE INCIDENCE RATE OF ACCUMULATED CASES OF COVID-19 BY ENTITY OF RESIDENCE.

National rate 13.93

0 to 10.0 (19 states)

40.1 to 50 (2 states)

10.1 to 20 (5 states)

50.1 to 60 (1 states)

20.1 to 30 (2 states)

60.1 to 70 (0 states)

30.1 to 40 (2 states)

>70 (1 states)

Elaborated by Prodensa with information from the Health Ministry of Mexico

PANDEMIC’S SITUATION IN THE WORLD • As of December 7, 2021, globally there have been reported 265,194,191 confirmed cases (531,156 new cases) of COVID-19 and 5,254,116 deaths (6,374 new deaths*). Lethal rate: 3%. In the last 14 days, 8,077,988 cases were reported globally.

SOURCE: https://www.gob.mx/salud/

TOWARDS THE “NEW NORMAL” INCIDENTS OF CONTAGIONS IN THE POPULATION BY REGION AS OF DECEMBER 8

DEATH INCIDENTS IN POPULATION BY REGION AS OF DECEMBER 8

SOURCE: https://www.gob.mx/salud/

EHS

LABOR

WHAT WE KNOW ABOUT OMICRON INFECTION AND SPREAD • How easily does Omicron spread? The Omicron variant likely will spread more easily than the original SARS-CoV-2 virus and how easily Omicron spreads compared to Delta remains unknown. Scientists expect anyone with Omicron infection to spread the virus to others, even if they are vaccinated or don’t have symptoms. • Will Omicron cause more severe illness? More data are needed to know if Omicron infections, especially reinfections and breakthrough infections in fully vaccinated people, cause more severe illness or death than infection with other variants. • Will vaccines work against Omicron? Current vaccines are expected to protect against severe illness, hospitalizations, and deaths due to infection with the Omicron variant. However, breakthrough infections in fully vaccinated people are likely to occur. With other variants, like Delta, vaccines have remained effective at preventing severe illness, hospitalizations, and death. The recent emergence of Omicron further emphasizes the importance of vaccination and boosters. • Will treatments work against Omicron? Scientists are working to determine how well existing treatments for COVID-19 work. Based on the changed genetic make-up of Omicron, some treatments are likely to remain effective while others may be less effective.

DAVID ANTUNEZ Environmental, Health, and Safety Director.

STRONGER TOGETHER The great global challenges require regional solutions. The recovery of jobs in Mexico has been highly driven by consumption incentives in the United States. More and better jobs in our country create confidence in our local market, which activates our economy. Our two nations are highly intertwined, not only because of the border we share but also because of trade and the strong ties of people on both sides of the border. Those companies in Mexico that best comply with the USMCA’s labor commitments will be better prepared to face the upcoming challenges and increasing opportunities that our still new trade agreement brings. To learn how to be in full labor compliance, contact our experts.

ALVARO GARCIA HR, Vice President