The Organization for Economic Cooperation and Development (OECD) improved the prospects for Mexico’s economic growth from 4.5% to 5% for 2021, since exports are above the pre-pandemic level and consumption will recover as the vaccination. However, there is a great pending challenge: investment, said Alberto González Pandiella, economist for Mexico and Costa Rica at the OECD, on Monday.
“The great pending challenge is investment, starting the investment engine, it was already weak before the pandemic, it is a challenge before the pandemic, and now it has become an even more important challenge,” he commented at the presentation. of the 2021 Economic Outlook of the international organization.
Mexico must reduce regulatory uncertainty and paperwork, the country has made progress in reducing paperwork at the federal level, but there is room to reduce paperwork and bureaucracy at the state and municipal level. This would favor investment, explained González Pandiella.
When the new federal administration arrived, it was found that Mexico is one of the countries with the lowest rates of tax collection in the world, with high levels of tax evasion, avoidance and fraud. Also with a lack of competition in various sectors, such as finance, and sustained falls in investment for a decade, explained Gabriel Yorio, Mexico’s Undersecretary of Finance.
“To erase these problems, work has been done on a reform agenda, for example, in the collection part we made changes to the law in 2019, which came into effect in 2020, especially to reduce tax evasion and strengthen income” commented the official.
Recommends giving help to those affected by pandemic
The agency stressed that thanks to the authority’s effort to make revenue collection more efficient, avoiding tax evasion and fraud, there is fiscal space to help the population affected by the pandemic.
“There is fiscal space for Mexico, to give more support to workers, companies that have been affected by the pandemic,” commented the economist in charge of Mexico at the OECD.
He stressed that fiscal prudence has also been observed in previous years and that debt management in Mexico is very solid, which is why it has very broad access to capital markets.
“Tax revenues have shown great resistance in 2020, even increasing despite the economic downturn. These elements suppose that there is fiscal space to give more support ”, explained the economist.
Temporary inflation
The report highlights that it highlights the rise in inflation in Mexico, but this will be temporary, especially when compared with the month of the previous year when very low levels were reported, in addition to the increase in the price of energy in recent weeks.
It is expected that heading into the second half of the year, inflation will begin a downward trend, the report noted.
