Latin American Economic Outlook 2022

Mexico

1. Recent trends

Poverty in Mexico remained largely unchanged, at 37.4% in 2020, compared to 37.6% in 2016, above the Latin America and the Caribbean (LAC) average of 26.3%. Extreme poverty in that period rose from 8.4% to 9.2%, partly owing to the impact of the COVID-19 pandemic, above the LAC average (8.7%). The population living in completely informal households decreased from 41.6% in 2010 to 37.0% in 2018, in line with the LAC average of 36.3% in 2018. Regarding environmental indicators, in 2019, greenhouse gas (GHG) emissions per capita were 5.1 tonnes of carbon dioxide equivalent (t CO₂e), lower than the averages for LAC (6.3) and countries belonging to the Organisation for Economic Co-operation and Development (OECD) (9.1). That year, the share of the population exposed to air pollution levels that pose risks to human health (PM2.5 at more than 10 µg/m³) was 99.5%, higher than 95.4% for LAC and 61.0% for the OECD. The marine protected area of Mexico accounted for 21.6% of its territorial waters in 2021, substantially higher than 7.3% for LAC and above 18.6% for the OECD. On the fiscal side, environmentally related tax revenue was 1.4% of gross domestic product (GDP) in 2020, above LAC (1.0%) but below the OECD (2.1%). Total tax revenue as a percentage of GDP (17.9%) remains lower than the averages for LAC (21.9%) and the OECD (33.5%).

2. Long-term development policies for a green transition

Mexico hosts 10-12% of the world’s biodiversity and is geographically vulnerable to climate change risks. Climate change mitigation and adaptation were declared a public interest as early as 1988 (General Law of Ecological Equilibrium and Environmental Protection). In 2020, the Natural Resources Sectoral Programme 2020-2024 was launched. Mexico intends to submit improved 2030 NDC targets before the United Nations Climate Change Conference (COP27).

For its mitigation efforts, Mexico has published a Special Climate Change Program 2021-2024, which focuses on enhanced synergies with adaptation actions to generate environmental, social, and economic benefits. The National Development Plan 2019-2024 promotes sustainable development through inclusion of population and communities to produce energy from renewable sources. Current priorities are hydroelectric, solar and wind energy. Concerning carbon sinks, the General Law for Sustainable Forest Development and the National Forestry Program 2020-2024 promote sustainable forestry management, while the National Biodiversity Strategy of Mexico and the Action Plan 2016-2030 promotes biodiversity conservation. In 2019, Mexico launched the Sembrando Vida reforestation programme, which pays 420 000 farmers to plant trees.

Regarding adaptation, Mexico has focused its activities, through the Special Climate Change Program 2021-2024, on maintaining environmental services, reducing vulnerability to climate change, and increasing resilience of the communities. Regarding agriculture, Mexico published a Sectoral Programme for Agriculture and Rural Development 2019-2024, which resulted in 3 special and 11 institutional programmes, on fisheries and aquaculture, sugarcane, and national food security. The ADAPTUR project supports the adaptation of the tourism sector, with support from the German International Development Agency (GIZ). To monitor risks and adaptation progress, Mexico developed a National Environment and Natural Resource Information System, a National Risks Atlas, a National Atlas of Vulnerability to Climate Change, a National Program of Hydraulic Contingencies, and a National Water Program 2020-2024.

In its international partnerships, Mexico emphasises natural environmental conservation, agriculture, and energy. Within LAC, Mexico is fostering collaboration with Belize, Guatemala and GIZ to conserve the shared tropical forest region. Beyond LAC, Mexico collaborates on projects for adaptation technologies (2021) and adaptive river restoration (2021), with support from the Green Climate Fund (GCF). It is also creating a risk-sharing facility for agricultural businesses (2019) with the Inter-American Development Bank (IDB). Moreover, Mexico formed a policy-oriented Climate Change Alliance (2017) and an Energy Partnership (2017) both with Germany.

Regarding green finance, the Green Finance Advisory Council (2016) promotes a sustainable financial market. Exemplary results are Mexico’s Green Bond Principles and several investor statements. The initiation of a national GHG emissions market was required by law in 2018, and an emissions trading scheme will be launched in 2023. Mexico also co-operates with the United States Agency for International Development (USAID) in the creation of carbon credits.

Key indicators – Mexico

	Mexico		LAC		OECD
Social
	2016	2020	2016	2020	2016	2020
Extreme poverty	8.4	9.2	8.1	8.7	N/A	N/A
Poverty	37.6	37.4	25.9	26.3	N/A	N/A
Share of Internet users (% of population)	59.5	72.0	53.7	68.1	81.8	88.0
	2016	2020	2016	2020	2016	2019
Gini index	47.7	45.4	46.3	45.3	34.9	34.2
	2010	2018	2009	2018	2009	2018
Share of total population in informal households (%)	41.6	37.0	43.4	36.3	N/A	N/A
Share of total population in informal households, upper-income quintile (%)	18.0	17.4	24.5	13.6	N/A	N/A
Share of total population in informal households, lower-income quintile (%)	78.0	70.9	70.4	72.0	N/A	N/A
	2016	2019	2016	2019	2016	2019
Health expenditure (% of GDP)	5.6	5.4	6.5	6.8	8.7	8.8
SIGI index	N/A	29.0	N/A	25.4	N/A	17.5
	2015	2018	2015	2018	2015	2018
PISA score in science	416	419	411	407	489	487
Productivity and innovation
	2016	2021	2016	2021	2016	2021
Labour productivity (% of the United States)	37.7	32.8	29.0	26.6	69.9	67.2
	2016	2020	2016	2020	2016	2020
High-tech exports (% of manufactured exports)	20.6	21.5	8.4	7.2	16.5	16.2
	2016	2020	2016	2019	2016	2019
R&D expenditures (% of GDP)	0.4	0.3	0.3	0.4	1.8	2.0
Citizens’ perceptions and institutions
	2016	2021	2016	2021	2016	2021
Share of population satisfied with efforts to preserve the environment (%)	46.3	38.3	46.2	42.0	55.3	51.2
Share of population with confidence in national government (%)	27.8	48.3	34.2	39.4	40.3	46.3
Share of population that thinks corruption is widespread throughout government (%)	82.9	68.6	74.5	70.0	59.0	54.9
Share of population satisfied with the education system (%)	58.4	49.6	64.9	54.3	67.0	66.8
Share of urban population satisfied with the availability of quality health care (%)	50.9	47.4	49.2	48.9	68.2	69.5
Environment and the green transition
	2004-19		2004-19		2004-19
Loss of natural and semi-natural vegetated land (%)	0.9		1.5		1.3
	2016	2019	2016	2019	2016	2019
GHG emissions per capita excluding LUCF (t CO2e)	5.5	5.1	6.3	6.3	9.6	9.1
Air pollution – exposure to PM2.5 (annual average exposure to more than 10 µg/m3, % of population)	99.5	99.5	95.5	95.4	61.3	61.0
	2016	2020	2016	2019	2016	2020
Contribution of renewables to total primary energy supply (%)	8.5	9.6	34.2	33.4	19.7	22.9
	2016	2021	2016	2021	2016	2021
Marine protected areas (% of territorial waters)	2.3	21.6	2.5	7.3	16.5	18.6
Fiscal position
	2016	2020	2016	2020	2016	2020
Environmentally related tax revenue (% of GDP)	1.6	1.4	1.1	1.0	2.4	2.1
Total tax revenues (% of GDP)	16.6	17.9	22.2	21.9	33.6	33.5
Share of VAT (% GDP)	3.9	4.3	5.8	5.6	6.6	6.7
Share of PIT (% GDP)	3.4	3.8	2.1	2.2	7.8	8.3
Share of CIT (% of GDP)	3.5	3.6	3.3	3.4	2.9	2.7
Perception of tax evasion (%)	N/A	24.3	N/A	27.3	N/A	N/A
Debt service (% of total tax revenue)	18.8	21.8	11.3	13.0	5.6	5.2
	2016	2020	2016	2020	2016	2019
Social expenditure (% of GDP)	9.9	10.4	11.5	13.6	20.0	19.9

Note: See the Reader’s Guide for definitions and sources.

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