Weekly Report 96

GENERAL SITUATION IN MEXICO

Weekly Review #96 I March 16, 2022

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MANUFACTURING INDUSTRY MEXICO HAS THE OPPORTUNITY TO BE THE KING OF ‘NEARSHORING’ IN NORTH AMERICA. Mexico can consolidate its position as a leading nearshoring market in North America, that is, as a destination for the transfer of production chains of international companies, according to research by the U.S. consulting firm Bain & Company.

The study projects that this could accelerate growth by at least two percentage points in manufacturing sector exports in the coming years, from 4-5% to 6-7%.

According to research by Bain & Company, this is equivalent to an additional $8 billion dollars annually to the amount that the industry usually produces.

The study highlights that Mexico has a strong manufacturing industry, with a stable export growth between 4% and 5% annually, predominantly in the transportation, mechanical-electrical devices, and machinery industries.

According to Bain’s report “Nearshoring opportunities for Mexican companies,” in the last six years, Mexico has acquired a competitive cost advantage over China, the largest nearshoring market worldwide, which could generate a significant change in the import trends of U.S. and European companies in the automotive, household appliances, machinery, furniture, plastics, among others.

Some of the industries with the greatest potential for nearshoring in Mexico are electrical-mechanical devices (medical equipment and photographic articles) and industrial machinery (transformers, industrial pumps), which represented around 17% of U.S. imports in each category in 2020.

“Monterrey, Tijuana, and Queretaro are some of the cities that, due to their already consolidated industrial envi-

SOURCE: Forbes Mexico

ronment, are attractive sites for international companies that could relocate some of their production processes to Mexico. In addition to the United States and China, companies from Germany, Canada, Denmark, and France have also begun to relocate operations to Mexico,” the research indicates.

The consulting firm explains that there are four factors that favor Mexico for more international companies to relocate their production centers to the country: Time zones aligned with the United States, facilitating communication between production centers compared to the time change with China and Europe.

Transportation costs, as well as more affordable and faster delivery times due to proximity and low complexity. For example, shipping costs from northern Mexico can be cheaper than in China.

USMCA. This trade agreement eliminated tariffs on exports from Mexico to the United States, which favors Mexican production in various industries, especially in the manufacture of automobiles and automotive components.

An experienced manufacturing industry with high-quality standards and a highly skilled workforce. The gross value added of Mexico’s manufacturing industry is around US$221 billion and contributes 18% to the national GDP.

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GOOD NEWS MEXICO APPLIES 129,543 NEW DOSES OF COVID VACCINES; 186.5 MILLION DOSES HAVE BEEN ADMINISTERED.

The Ministry of Health reported that this Monday, March 14, 129,543 new vaccines were applied, bringing the total number of doses applied to 186 million 532,017 so far, while it is estimated that 87 percent of the country’s population has at least one dose.

An estimated 85 million 426,974 Mexicans have been vaccinated so far, of which 79 million 380,412 are estimated to be fully vaccinated, equivalent to 93 percent of those vaccinated.

On the other hand, 6 million 056 thousand 562 people have been vaccinated in a new scheme, representing 7 percent of the population.

It is estimated that there are 89 million 484 thousand 507 people of legal age in our country, of which 80 million 677 thousand 831 have at least one dose, which represents 90 percent of Mexicans in this age group.

The 14 to 17 years old age group has 8 million 894

SOURCE: El Financiero

thousand 016 people; however, only 4 million 759 thousand 143 have at least one vaccine, representing 53 percent of Mexicans under age vaccinated.

The state with the majority of its population over 18 years of age vaccinated with at least one dose is Mexico City with 100 percent, while the state of Chiapas has the lowest vaccinated population so far with 71 percent. The state of Quintana Roo is the second with the second-highest number of doses applied with 99 percent.

224 million 349 thousand 035 doses have been received since December 23, 2020.

Today, 115,462 doses were lost because they were not applied.

Of the 5 million 884 thousand 519 cases of COVID that Mexico has had, 4 million 900 thousand 680 people have recovered while 321 thousand 115 have died.

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KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning Press Conference March 9- 15, 2022 COVID-19

WATER SCARCITY

Hugo Lopez-Gatell, Subsecretary of Health Preven-

A reporter asked the Executive about water scarcity

tion and Promotion, reported that Mexico is in its 6th

in the northern side of the country. AMLO declared

week of decreasing COVID-19 cases and hospitaliza-

that several permits to beer factories are being lim-

tions. He mentioned the possibility of a spike in pos-

ited due to their excessive water consumption. He

itive cases, but that widespread vaccination has sus-

pointed out that it is important to make technical

tained general immunity.

changes to irrigation systems and distribution in cit-

• Informed there are 26,809,847 vaccines in storage.

ies to prevent leaks.

• Now that the pandemic is decreasing, the government is diagnosing the nation’s health situation to implement programs that guarantee access to efficient health services.

UKRAINE-RUSSIA CONFLICT The President reassured there will not be a rise in gas or energy prices due to a subsidized system, mining inflated prices.

• He signaled that electric reform is needed to put the nation’s interest over private sector convenience.

• He restated that Mexico’s posture is peacekeeping and promoting non-intervention, which is why Mexico will not send weapons to either party.

There will not be censorships to either side of the conflict’s media, and Mexico will send a plane to recover Mexicans looking to leave Russia.

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KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning Press Conference March 9- 15, 2022 ECONOMY

INFRASTRUCTURE

The Attorney General mentioned that remittances

A hospital in Tula, Hidalgo, is set to be constructed in

had reached a 350 USD average. This goes beyond

the terrain destined for the Bicentenario Refinery.

the previous record of four years, increasing 73.35%.

• Roman Meyer, Minister of Urban, Agricultural, and

He said that this administration has tripled remit-

Territorial Development presented the urban de-

tances and has made a call to revise commissions

velopment program 2019-2022, reporting over

charged by sending and receiving the money. Stat-

100 municipalities intervened, 751 public projects,

ing that one of the best options is OXXO.

191 thousand homes, and 71 municipal plans made.

• Plans are set for Istmo de Tehuantepec’s infra-

ELECTRIC REFORM

structural development.

Accusations against Mexicanos Contra la Corrupcion

• The Felipe Angeles Airport is set to be delivered

and Mexico Evalua on false information on CFE. All

next week, saving 100 million pesos in construc-

opposition founded groups according to AMLO.

tion, according to AMLO.

• About Spain’s chancellor declaration, he mentioned that the electric reform will solve abuse

• AMLO is set to meet native groups to improve development conditions in Sonora.

problems like the Iberdrola case.

• He mentions lithium as a key factor to be exploited for the nation’s benefit.

MANDATE ABSOLUTION VOTE AMLO stated that INE is acting antidemocratically

• He mentions that even when PEMEX has 90% of

and violating the Constitution because they do not

the distribution capacity of gas, the same does not

want people to be informed on the vote, which he

go for the electric industry. He stated that there

qualified as a democratic exercise.

must be territory regained for CFE. INTERNATIONAL RELATIONS AMLO mentioned that Argentina’s President Alberto Fernandez sent him a letter stating the importance of integration in Center and South America. AMLO replied he is very committed to the development of the region.

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

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MEASURES TAKEN

BY STATES IN MEXICO

BAJA CALIFORNIA The State of Baja California remains low-risk or green light with 268 active cases in the past 14 days. The preventive measures continue with the healthy distance, application of the vaccine booster, use of face masks, ventilation of spaces. The vaccination plan continues with applying the vaccine booster to the adult population. Last week, the binational vaccination day was held at the East Mexicali port of entry, between Mexicali and Calexico. The event was aimed at first aid and maquiladora personnel from Mexicali.

SONORA The State of Sonora is considered lowrisk or green light with two municipalities at medium-risk or yellow light. Official reports confirm 71 new cases in the last 24 hours. This week, the vaccination plan continues in different municipalities with the booster application to the adult population. Also, the health secretary announces the 19 COVID-19 centers throughout the State where you can go for a COVID-19 test.

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MEASURES TAKEN

BY STATES IN MEXICO

COAHUILA Coahuila announced this past Friday that it will lift the obligation for citizens to use face masks in open spaces as part of the measures to prevent COVID-19 infections.

TAMAULIPAS Tampico, Madero, and Altamira are once again at a red light due to COVID-19, after 73 new cases and 4 deaths were identified in Tamaulipas.

NUEVO LEON The La Boca dam has 10 days of supply left and the Cerro Prieto dam 27 days.

The consequences of this water crisis for Monterrey are important from an economic point of view since water rationing will directly affect homes, businesses, and industry.

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MEASURES TAKEN

BY STATES IN MEXICO

AGUASCALIENTES With data until March 14, the lowest number of positive cases in the last week was reported, with only 142, and the accumulated number of cases rose to 62,435. In the case of bed occupancy with ventilators in intensive care units at the national level, Aguascalientes dropped to third place with 40%, well below the saturation levels it reached weeks ago. In contrast, the use of intermediate therapy beds fell to eighth place, with only 11.32%The total number of accumulated cases from March 2020 to date reaches 62,435. However, fortunately in a total of 53,556 of them the infected people have managed to overcome the health problem, while at least 3,588 have unfortunately died, this in the data handled by the Federal Health Secretariat, since the number of fatalities, according to open data, was until last Saturday night of 5,143 lives lost in the state.

Active cases presented for the second day in a row another slight increase of 48, closing at 714, while suspected cases decreased by only 4 to 12,472, and where there were important increases were in the negative cases with 140 more, to reach a total of 109,901, and in the recovered cases, with 93 more, to reach the already mentioned 53,556 cases where the infected persons managed to restore their health.

QUERETARO With data until March 15, there have been 65 cases of the disease in the state (nine on Saturday, three on Sunday, and 53 on Monday), 34 women and 31 men.

The accumulated record is 137,95 cases; 52% are women, and 48% are men.

A total of 239 patients were discharged from the hospital, resulting in a total of 130,132 discharges (94.92%). With mild symptomatology, isolation, and home management, 337 patients and 29 were hospitalized, 11 seriously ill. Six thousand 597 deaths have been recorded. Concerning the availability of general hospitalization beds and beds with ventilators, with information as of March 14, there is an occupancy rate of 14 percent, based on the Negative Network of Acute Respiratory Infections (IRAG). In Queretaro, 13 percent of beds with ventilators and 15 percent without ventilators were occupied.

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MEASURES TAKEN

BY STATES IN MEXICO

GUANAJUATO In Guanajuato, there are 279,574 confirmed cases of COVID-19; 372 are under investigation, while 304,765 cases have already been ruled out. As for community-transmitted cases, 279,418 have been identified, and 263,969 cases have been recovered. There have been 15,054 deaths in the entity.

JALISCO Two years after the pandemic, 577,072 cases and 19,096 people have lost their lives in Jalisco. On March 14, 2020, the first two cases of COVID-19 were registered in two women residents of the municipality of Zapopan who had traveled to Spain and Germany. According to data from the agency, during epidemiological week 10, from March 6 to 12, 5,350 new infections were reported in Jalisco (1,443 new cases less than those reported the previous week), for a total of 576,262 people infected as of March 12. In addition, 49 deaths were reported (137 less than the previous week) for a total of 19,096 deaths registered so far in the pandemic up to March 12. During epidemiological week 10, 64,739 people were immunized, of which 59,710 received doses from AstraZeneca for first and second doses for adults and boosters; 1,664 from Pfizer-BioNTech for adolescents; 1,703 from Sinovac; 1,372 from Moderna for second doses, and 290 from CanSino for stragglers.

SAN LUIS POTOSI Until March 14, San Luis Potosi registered an increase of 403 positive cases of COVID-19, higher than the number registered on March 13, with only 287 new cases of infection, according to the State Committee for Health Safety. The 403 new infections correspond to 227 women and 176 men, including a 10-month-old baby and 86 fully vaccinated people. According to health authorities, there were three deaths. As for hospital occupancy by COVID-19, the state remains at a low level, registering barely four percent, and as for those requiring a mechanical ventilator, it barely reaches one percent. So far, there are only 22 people hospitalized in a hospital in the state; seven of them are stable, 13 were reported as serious, and there are only two on assisted ventilation. On March 13, it was two years since the beginning of the pandemic in San Luis Potosi. Currently, the state has accumulated 177,794 infections and 7,524 deaths.

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MEASURES TAKEN

BY STATES IN MEXICO

STATE OF MEXICO The third dose vaccine applications have begun for young adults aged 18-29. The Institute for Health in Estado de Mexico (ISEM) is reported not to have spent any monetary resources for COVID-19 in the last 9 months. Last year the expenses for COVID-19 related issues rounded up to 4 billion MXN. The Secretaria de Contraloria is monitoring this irregularity to verify that necessary services and goods related to COVID-19 prevention safety are being delivered.

CDMX 36% of parking lot revenues have decreased due to home office and online classrooms, according to El Financiero.

All related industries, such as Parkeo.mx, an online parking space leasing platform, plummeted to 60% during the first, second, and third wave of COVID-19. Due to the decrease in confirmed cases, CDMX has announced the closure of the Kiosks dedicated to free COVID-19 tests. However, according to El Milenio, a 9-year old’s death due to the Omicron variant is causing an alert amongst scientists and health experts.

NATIONWIDE: Patria,” the Mexican vaccine, is due to report results of its effectiveness next week. Lopez Obrador declared in his morning conference that all contracts in place for the Russian vaccine Sputnik will remain, but also mentioned that no further contracts to acquire vaccines will be made since reserves are stocked, and results on Patria have optimistic predictions.

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ECONOMIC RECOVERY MEXICO’S INDUSTRIAL PRODUCTION RISES 4.3% IN JANUARY The highest increase in industrial production was recorded in the mining sector with 10.6%, while the lowest was 0.7% in construction.

Mexico’s industrial production rose by 4.3% yearon-year in January due to the increase in all sectors, especially mining, informed this Friday the National Institute of Statistics and Geography (Inegi).

This figure was the result of increases in mining (10.6%), manufacturing industries (3.8%), generation and transmission of electricity, water and gas (1.1%), and construction (0.7%), the agency said in a statement.

In seasonally adjusted figures, industrial activity increased by 1% in January with respect to the previous month due to the rise in mining (7%) and manufacturing (0.3%), while construction (0.2%) and electricity generation (0.2%) fell.

“With respect to December 2021, industrial activity increased 1%. In its annual comparison, the indicator increased 4.3% in real terms,” Inegi president Graciela Marquez explained on Twitter.

That substantial drop in 2020 added to the 1.8% decline in 2019, reflecting Mexico’s economic weakness.

In 2021, industrial production rebounded 6.5% compared to 2020, a year in which due to the coronavirus pandemic -which led to the closure of all non-essential activities between April and May 2020- there was a 10% plunge.

Mexican gross domestic product (GDP) grew 4.8% in 2021 after contracting 8.2% in 2020, its worst plunge since the Great Depression of 1932.

In June 2020, the so-called “new normal” began with a gradual opening of the economy and social activities.

By 2022, most institutions and analysts estimate that Mexico’s economy will grow around 2.3%.

SOURCE: Forbes Mexico

In 2019, the fall in GDP was 0.3%.

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TOWARDS THE “NEW NORMAL”

DISTRIBUTION OF DEATHS PER STATE DUE TO THE PANDEMIC

INFORMATION UPDATED ON MARCH 14, 2022 AT 19:00 HRS LOCAL TIME.

NEW CASES REPORTED: 1,018

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

CONFIRMED CASES: 5, 607,845

NEW DEATHS REPORTED: 12

CONFIRMED DEATHS: 321,115

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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 13.73

0 to 10.0 (15 states)

40.1 to 50 (2 states)

10.1 to 20 (11 states)

50.1 to 60 (1 states)

20.1 to 30 (3 states)

60.1 to 70 (0 states)

30.1 to 40 (0 states)

>70 (1 states)

Elaborated by Prodensa with information from the Health Ministry of Mexico

PANDEMIC’S SITUATION IN THE WORLD • As of March 14, 2022, globally there have been reported 456,797,217 confirmed cases (11,700,605 new cases since last week´s report) of COVID-19 and 6,043,094 deaths (44,793 new deaths*).

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

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TOWARDS THE “NEW NORMAL” INCIDENTS OF CONTAGIONS IN THE POPULATION

BY REGION AS OF MARCH 15

DEATH INCIDENTS IN POPULATION

BY REGION AS OF MARCH 15

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

EHS

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DAVID ANTUNEZ Environmental, Health, and Safety Director.

RECOMMENDATIONS FOR TRAVELERS PROTECT YOURSELF AND OTHERS Follow all state, local, and territorial health recommendations and requirements at your destination, including properly wearing a well-fitting mask and following recommendations for protecting yourself and others.

Travelers 2 years of age or older should wear well-fitting masks in indoor public places if they are: • NOT up to date on their COVID-19 vaccines • Up to date on their COVID-19 vaccines and in an area with substantial or high COVID-19 transmission • Up to date on their COVID-19 vaccines and with weakened immune systems In general, you do not need to wear a mask in outdoor settings.

• In areas with high numbers of COVID-19 cases, consider properly wearing a well-fitting mask in crowded outdoor settings and for activities with close contact with others who are not up to date on their COVID-19 vaccines.

Wash your hands often with soap and water, or use hand sanitizer with at least 60% alcohol.

LABOR

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ALVARO GARCIA HR, Vice President

VIOLENCE AND HARASSMENT CONVENTION The Mexican Senate has approved, unanimously, the most recent convention of the international labor organization, Convention 190, to prevent and eliminate Violence and Harassment. In the following days, the convention will be signed by the Mexican president, posted in the official gazette, and submitted to the ILO for its official registration.

The new convention protects workers and other persons in the world of work, including employees, as well as persons working irrespective of their contractual status, persons in training, including interns and apprentices, workers whose employment has been terminated, volunteers, job seekers, and job applicants, and individuals exercising the authority, duties or responsibilities of an employer. The convention applies to all private or public sectors, both in the formal and informal economy.

Convention 190 applies to violence and harassment occurring in the course of, linked with, or arising out of work, including in the workplace, public and private spaces, in places where the worker is paid. It also protects during work-related trips, travel, training, events, or social activities and when commuting to and from work.

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