OECD ECONOMIC SURVEY OF MEXICO 2017

www.oecd.org/eco/surveys/economic-survey-mexico.htm

Reforms are paying off

10 January 2017, Ciudad Mexico

2

Productivity growth is picking up

Note: Shaded areas show projections for 2016 and 2017.Source: OECD Economic Outlook 100 database.

3

Reforms affected many states and sectors but others lag behind

Examples of frontier sectors are auto, telecommunications, quarrying, warehousing services.

Fastest-growing states are Zacatecas, Querétaro, Aguascalientes, Guanajuato.

Source: OECD calculations using data from INEGI.

4

Mexico is a top reformer

Note: Emerging OECD countries include Chile, Estonia, Hungary, Mexico, Poland and Turkey. Southern Europe countries are Greece, Italy, Portugal and Spain.Source: OECD, Going for Growth 2015.

5

Reforms led to a decline in telecom and electricity prices

Note: Peer OECD countries include Estonia, Hungary, Poland, Portugal, Slovak Republic, Slovenia, and Turkey. Source: OECD Calculations – data from International Energy Agency and OECD System of National Accounts.

6

Oil and gas prices have risen recently

Source: OECD Calculations using Bloomberg and Servicio Geológico Mexicano (SINEM)..

7

The energy reform attracts foreign investment

(USD billions) 1st auction 2nd auction 3rd

auction4th

auction

Overall investment committed 2.70 3.10 1.10 34.4

Investment in the short-term 0.15 0.60 0.62 0.34

Auctions (round 1) outcomes for exploration and extraction of hydrocarbons

Source: Secretario de Energía (SENER).

8

More infrastructures are needed

Source: OECD calculations with national agencies.

9

Revenues rose sharply after the fiscal reforms

Note: IEPS represents the special tax on products and services. Source: Ministry of Finance (SCHP)

10

The oil dependence has declined

Source: OECD calculations using data from the Ministry of Finance (SHCP)

11

Credit increased after the financial reform

Source: Banco de México.

12

The economy is more resilient

Note: Shading shows projections. Source: OECD Economic Outlook 100.

13

Reforms will boost growth

Source: OECD Economic Survey of Mexico 2015.

14

WHAT IS LEFT TO DO

15

Implementation remains key(*non-Pacto reforms)

Reforms with implementation well

advancedReforms with gaps in

implementationReforms that have

not advanced enough

Tax policy

Financial sector liberalisation

Telecom deregulation

Election system

Competition policy and regulatory

Energy market openness

Labour market and tackling informality

Education quality

Anti-corruption and transparency

Judicial process reform

Innovation system*

Fiscal federalism*

Agricultural transformation*

Unemployment insurance, pensions and social benefits

Health system reform*

Urban planning*

Source: OECD Compilation.

16

Additional reforms will further boost growth

Source: OECD Economic Survey of Mexico 2015.

17

Informality did not decrease by much

Note: Rates are calculated against the total employed population including agriculture.Source: INEGI, Encuesta Nacional de Ocupación y Empleo (ENOE).

18

Agricultural transformation has not yet happened

Note: Countries presented are OECD peer countries. Catching-up periods have been identified as period of sharp decrease in the GDP per capita gap with the highest tier of OECD members. The selected countries/periods are as follows: CHL (2007-13), GRC (2001-09), HUN (2000-06), KOR (2007-15), POL (2006-12), SVK (2000-08), SVN (2000-08), and TUR (2001-11). Productivity is defined as the average value added per employee within the agricultural sector, in USD PPP 2011. Source: OECD calculations using data from the Economic Outlook 100 and the World Bank.

19

Female labour participation is rising, but the gender gap remains large

Source: OECD Calculations using data from INEGI.

20

Paid leave entitlements are low and not gender equitable

Source: OECD Family database.

21

Gender gaps in financial inclusion are large

Source: Encuesta Nacional de Inclusión Financiera (ENIF) 2015, (CNBV, 2015).

22

Poverty is stagnant but social conditions are improving

Note: Panel A: Food poverty: insufficient income to purchase the basic food basket. Patrimony poverty: insufficient disposable income to acquire the food basket and make the necessary expenditures on health, education, clothing, housing and transportation. Population with income below the minimum welfare line: people who cannot acquire the value of the food basket with their current income. Population with income below the well-being line: people who cannot acquire the value of the sum of a food basket plus a basket of goods and services with their current income. Source: OECD Income Distribution Database, CONEVAL, INEGI.

23

Taxes and transfers have a low impact

Note: Data from the latest available year. Source: OECD Income Distribution database.

24

High perceived corruption hampers growth

Source: Transparency International (2015).

25

Mexican firms are less socially responsible than other North and South American firms

Note: Average environmental (E), social (S) and governance (G) score. Source: ASSET4 Thomson Reuters data.

26

Recommendations to transform agriculture and reduce informality

• Strengthen awareness of in-work subsidies for formal workers.

• Focus enforcement on large formal firms employing informal workers.

• Reform the legal framework of eijidos and tierras communales (areas of communal lands used for agriculture).

27

Recommendations to improve female participation

• Expand public early childcare and pre-school coverage.

• Extend the length of paternity and maternity leaves.

• Better enforce the constitutional provision on gender discrimination, particularly in the workplace, boardrooms and credit markets.

28

Recommendations to tackle poverty

• Simplify the administrative procedures for accessing cash transfers.

• Increase the role of social workers in reaching out to marginalised families.

• Strengthen social expenditure on programmes to eradicate extreme poverty, such as Prospera.

• Raise and broaden the minimum pension to expand the old-age safety net.

29

Recommendations to fight corruption and crime

• Build capacity of the sub-national level entities involved in the new anti-corruption system.

• Encourage more states to establish integrated state-wide police forces.

• Extend oral trials to all civil and commercial cases.

• Boost training, resources and technology for the judiciary.

30

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OECD Economic Surveys: Mexico 2017

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