OECD Economic Survey of Mexico 2022 – Presentation

@OECDeconomy

@OECD

Web: oe.cd/mexico

The recovery is underway Real GDP Index 2019Q4 = 100 110

110 MEX

OECD

105

105

100

100

95

95

90

90

85

85

80

80

2020

Note: Shaded area represents a forecast.

Source: OECD Economic Outlook 110 database.

2021

2022

2

Exports of the manufacturing sector have recovered quickly Manufacturing exports Index, 2013 = 100, s.a.

180

180

160

160

140

140

120

120

100

100

80

80

60 40 20 0 2013

60

Total manufacturing

40

Automotive

20

Non-automotive manufacturing 2015

2017

2019

2021

0

Source: INEGI. 3

Inflation has picked up Y-o-y % changes 8 7

8 Headline inflation

Core inflation

Inflation expectations

7

6

6

5

5

4

4

3

3

2

2

1

1

0 2015

2016

2017

Note: Shaded area represents the central bank target range.

Source: Banxico.

2018

2019

2020

2021

0 2022

4

Maintaining fiscal sustainability

5

Public debt is expected to stabilise Public debt % of GDP 90 80

Current policies

Downside risk scenario

90

Growth enhancing scenario

80

70

70

60

60

50

50

40

40

30

30

20

20

10 2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

10 2050

Note: In the current policies scenario real GDP growth and inflation follow OECD projections until 2023 and then gradually converge towards potential output growth and the inflation target rate of 3%; the exchange rate between the Mexican peso and US dollar is kept constant. The interest rate yields is assumed to shift vertically following changes in inflation. The government primary balance follows forecasts from the Secretaría de Hacienda. The downside risk scenario assumes a one-off shock of 10% to the exchange rate with the US dollar and a permanent upward vertical shift of 100 basis points in the yield curve, with respect to the current policies scenario. In the growth enhancing scenario a higher GDP growth is assumed over the period 2022-2031 under the hypothesis that structural reforms were implemented. All scenarios include aging costs.

Source: OECD calculations. Data prior to 2020 are from SHCP and refer to central government debt.

6

Public spending is low Public expenditure % of GDP, 2020 70

60

60

50

50

40

40

30

30

20

20

10

10

0

0

KOR IRL CHL MEX COL TUR CHE LAC ARG NZL BRA AUS USA ISR JPN NLD OECD LUX PRT ISL GBR DEU ESP CAN SWE DNK FIN ITA AUT NOR GRC BEL FRA

70

Note: LAC is an unweighted average of Chile, Colombia, Costa Rica, Argentina and Brazil. OECD is an unweighted average.

Source: IMF World Economic Outlook, April 2021.

7

There is room to boost tax revenues Tax revenues % of GDP, 2019 50

45

45

40

40

35

35

30

30

25

25

20

20

15

15

10

10

5

5

0

0

MEX COL CHL IRL TUR CRI USA LAC KOR CHE AUS ARG ISR JPN NZL GBR BRA OECD CAN PRT ESP CZE POL HUN DEU NLD GRC NOR FIN ITA AUT BEL SWE FRA DNK

50

Note: LAC refers to Chile, Colombia, Costa Rica, Argentina and Brazil. All averages are unweighted. It includes taxes on income and capital gains, taxes on goods and service, social security contributions, payroll taxes and property taxes.

Source: OECD Revenue Statistics database.

8

The property tax is underused Property taxes % of GDP, 2019 or latest year 2.0

2.0

1.5

1.5

1.0

1.0

0.5

0.5

0.0

MEX

CRI

CHL

LAC

COL

OECD

Note: LAC is an unweighted average of Chile, Colombia, Costa Rica, Argentina and Brazil. OECD is an unweighted average of all member countries with available data.

Source: OECD Global Revenue Statistics database.

0.0

9

Restarting investment and boosting productivity

10

The economy has underperformed Index of real PPP-adjusted GDP per capita, 2000 = 100 225

225 MEX

CHL

Dynamic Asia

CRI

200

200

175

175

150

150

125

125

100

100

75 2000

2005

2010

Note: Dynamic Asia includes India, Indonesia, Malaysia, Philippines, Thailand, and Viet Nam. Source: World Bank World Development Indicators.

2015

2020

75

11

Investment has been weak Gross fixed capital formation Index, 2015Q1 = 100 140

140 MEX

130

OECD

130

120

120

110

110

100

100

90

90

80

80

70

70

60 2015

2016

Source: OECD Economic Outlook database.

2017

2018

2019

2020

2021

60

12

Productivity is low Labour productivity 1000s of PPP-adjusted USD per capita, 2020 or latest year 60

60

50

50

40

40

30

30

20

20

10

10

0

0

Note: OECD is an unweighted average of all OECD member countries with available data.

Source: OECD Productivity database.

13

Informality is high % of informal employment in total employment 2020 or latest year 70

70

60

60

50

50

40

40

30

30

20

20

10

10

0

CHL

TUR

CRI

ARG

BRA

MEX

COL

0

Note: Data for Costa Rica and Chile excludes own-use production workers and data for Argentina includes only main cities or metropolitan areas.

Source: ILO. 14

Boosting opportunities for all

15

Educational inequalities can be reduced Mean score in reading, math and science in PISA, 2018 550

550

500

500

450

450

400

400

350

350

300

300

MEX (25th)

COL

CRI

MEX

CHL

MEX (75th)

OECD

PRT

USA

CZE

POL

CAN

Note: MEX (25th) refers to the score at which 25% of students scored lower; similarly, MEX (75th) refers to the score at which 75% of students scored lower.

Source: OECD PISA 2018.

16

Women’s labour market participation should increase % of female population aged 15-64, 2020 90 80 70 60 50 40 30 20

0

TUR MEX CHL ITA CRI BRA COL KOR GRC POL BEL HUN IRL SVK FRA ISR USA ESP LUX OECD CZE PRT SVN AUT JPN AUS CAN GBR LVA DEU NOR DNK NZL FIN EST NLD LTU CHE SWE ISL

10

Source: OECD Labour Force Statistics.

17

There is room to raise access to finance % aged over 15 with account at financial institution, 2017 100

100

80

80

60

60

40

40

20

20

0

PER

COL

MEX

PRY

ARG

URY

CRI

BRA

Notes: Data for Mexico refer to 2018 and to adult population between 18 and 79 years of age.

Source: World Bank Global Findex database; Comisión Nacional Valores y Bolsa.

CHL

USA

FRA

GBR

0

18

Access to fixed broadband lags behind Fixed broadband subscriptions per 100 inhabitants, by speed tiers June 2019 60

60 <100 Mbps

≥ 100 Mbps

Breakdown not available 50

40

40

30

30

20

20

10

10

0

0

COL MEX TUR CHL POL LVA LTU SVK ITA AUT IRL CZE OECD FIN JPN EST ESP USA AUS PRT GRC CAN SWE GBR DEU KOR NOR NLD DNK FRA CHE

50

Notes: Mbps = megabits per second.

Source: OECD Broadband Portal (database).

19

There is scope to increase renewables Share of renewable energy in total energy supply, % 14

14 MEX

OECD

12

12

10

10

8

8

6

6

4

4

2

2

0 2000

2002

2004

2006

2008

2010

2012

Note: OECD is an unweighted average of all OECD member countries with available data.

Source: OECD Green Growth Indicators.

2014

2016

2018

0 2020

20

For more information

www.oecd.org/economy/mexico-economic-snapshot/ OECD Economics OECD Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

21