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GENERAL SITUATION IN MEXICO

Weekly Review #90 I February 2, 2022

MANUFACTURING INDUSTRY BAJA CALIFORNIA MANUFACTURING INDUSTRY CONSOLIDATES IN POST-PANDEMIC PERIOD The Maquiladora and Export Industry Association (Index) in Baja California considered this postpandemic period historic due to its demand levels in the manufacturing market, which will continue as a trend for 2022. The monthly meeting of the business organization headed by Pedro Montejo Peterson discussed topics such as the pandemic, the sector’s prospects for 2022, and binational collaboration. Kurt Honold Morales, Secretary of Economy and Innovation of Baja California; Dr. Luis Hernandez, National President of Index; and Jerry Sanders, President of the San Diego Chamber of Commerce, were the meeting guests. Pedro Montejo Peterson, president of Index Zona Costa BC, invited the members of Index Zona Costa BC to join the different committees of the association since they are the main support for the work being done. For his part, the Secretary of Economy and Innovation of Baja California, Kurt Honold Morales, spoke of the growth prospects in the region for the maquiladora industry and reiterated the support that the state government will provide to achieve this goal. The official mentioned the actions being carried out to address the main inhibitors of such growth: energy, water, security, the rule of law, and mobility. He emphasized that we will continue to seek the best investments and jobs for the region, mainly those related to software development since they are the most required worldwide.

In his speech, the national president of Index, Dr. Luis Manuel Hernandez Gonzalez, expressed that 2021, despite being an atypical year, had a large number of exports, registering the highest figures in the last 20 years. He indicated that the post COVID-19 recovery has been stronger than other economic impacts, as 103,000 more jobs were created in 2021 compared to 2020, while 70,000 more jobs were generated than in the pre-pandemic. The national leader of Index emphasized that economic growth for this year in Mexico is projected at 4.77%, with a Gross Domestic Product (GDP) of 3.2%.

MANUFACTURING INDUSTRY

Meanwhile, Jerry Sanders, president of the San Diego, California Regional Chamber of Commerce, mentioned that a manufacturing supply chain of 2.5 billion coproducers was created and that the region became the largest medical device cluster in the world. “Thanks to this, today we have one of the strongest cross-border supply chains in the world, driving the innovation economy and fostering competitiveness,” he said. As a result, today, we receive foreign direct investment from global companies such as KIA and Toyota, which have benefited from the region’s specialized production processes, with highly skilled labor.

SOURCE: Business Conexion

And thanks to the proximity of the regions, he said, medical device companies often cross the border several times throughout the different stages of production. Concluding Jerry Sanders extended an invitation for Index Zona Costa BC partners to join the delegation that will travel to Washington D.C., scheduled for March 27-30, 2022, to generate agreements that will benefit the Cali-Baja mega-region, and address the essential issues to optimize border crossing, crossborder trade, infrastructure, and health.

GOOD NEWS COVID-19 INFECTIONS IN MEXICO DECREASE 31%; THIS TREND OCCURS IN 25 STATES

The Undersecretary of Health, Hugo Lopez-Gatell, informed this Tuesday that COVID-19 infections have been reduced by 31% and that this decrease is present in 25 of the 32 states in the country.

The official mentioned that the reduction trend is occurring in 25 of the 32 entities, and “this has repercussions in that in a week and a half the Covid units are starting to be vacated.”

“We opened the week with a reduction, there was a 31% reduction in the estimated cases in the fifth week of the year, which is the one we are experiencing, and this is consistent with other signs, such as the reduction in hospital occupancy, the reduction in temporary work incapacities and the reduction in the percentage of positive results,” said the undersecretary.

However, despite this reduction, Lopez-Gatell commented that mortality is still on an upward trend, and those who arrive at the hospital and die are “most probably those who were not vaccinated.”

During President Andres Manuel Lopez Obrador’s morning conference, Lopez-Gatell pointed out that these reductions show that the peak of the fourth wave by COVID-19 is being passed. “They are several signals that show us that we have reached the acme point and have passed the peak of this fourth wave dominated by the Omicron variant,” he said.

SOURCE: Forbes Mexico

He also mentioned that the opening of schools had not meant a spread of COVID-19, but it was during the December holiday period when the fourth wave began in adults and children. He said that 166.1 million had been vaccinated in 83.6 million people so far, of which 94% have the complete vaccination schedule. Meanwhile, 66% of adults over 60 have already received their dose in the booster vaccination, and 19% of adults between 40 and 59 years of age.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning Press Conference January 26-Feb 1, 2022

COVID-19 Dr. Hugo Lopez-Gatell Ramirez, Undersecretary of Prevention and Health Promotion, pointed out that epidemic week number 5 opened the week with a 31% reduction in cases estimates, which is consistent with the hospital reduction, the reduction of temporary labor disabilities, and the reduction of the percentage of positivity. In this sense, he pointed out that the peak of the fourth wave of COVID-19 has already passed. Reported that 25 of the 32 states show a reduction trend; however, the Mortality shows an upward trend. Regarding vaccination, he highlighted that 166,102,210 doses had been applied since the beginning of the vaccination program. 83.6 million people have been vaccinated, of which 94% have a complete vaccination schedule, and only 6% have yet to complete their schedule. MANDATE REVOCATION The President reiterated that what is relevant to give or reaffirm the decision-making power of the people in a system that is authentically democratic, in which it is not the elites, but the sovereign people, who decide; and that the most important thing is that on April 10 the booths will be installed and everyone participates.

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

MEASURES TAKEN BY STATES IN MEXICO

BAJA CALIFORNIA The State of Baja California remains high-risk or orange light. Official reports confirm 3,994 active cases in the past 14 days. The vaccination plan continues for people over 18 years of age, educational personnel, and adolescents. This week the high school teachers and students with a complete vaccination schedule returned to the classroom. The Scientific Committee reiterated that it is necessary to continue applying preventive measures, such as the mandatory use of face masks in public places, constant hand washing, using gel with 70% alcohol, maintaining social distancing, and ventilating closed spaces.

SONORA The State of Sonora changed to highrisk or orange light. Official reports confirm 129 new cases in the last 24 hours. “Salud Sonora” once again makes a reminder of the 19 COVID-19 care centers where you can go for medical attention, and you can take a test if you have symptoms. The vaccination plan continues this week in different municipalities. The Ministry of Economy in Sonora was present at the meeting with the governor of Sonora and the consuls general of the United States in Hermosillo and Nogales, where important projects are planned to attract investment and economic development.

MEASURES TAKEN BY STATES IN MEXICO

COAHUILA Based on what is established by the Ministry of Economy and the Ministry of Labor in Coahuila, 8 percent of workers infected by COVID-19 are reported from a total of 206 companies surveyed, while in the Laguna Region, it is 5 percent, one percentage point less than the previous weekly report. TAMAULIPAS The Tamaulipas Ministry of Health will continue with the application of the Dry Law on Sundays, while massive events such as concerts and other shows remain prohibited until the first half of February. The rest of the economic activities continue in operation. NUEVO LEON The Ministry of Health announced that with the change in the indicators of the epidemiological traffic light, Nuevo Leon changed to orange. The entity reached a score of 61 to go from yellow to orange, which means a higher risk. Currently, the capacity allowed in the different lines is identical to those presented last week, that is, 50 percent in businesses with open spaces and 50 percent in businesses with closed spaces.

MEASURES TAKEN BY STATES IN MEXICO

AGUASCALIENTES COVID, heart disease, diabetes, malignant tumors, and accidents were ranked as the leading causes of death among Aguascalentenses during the first half of 2021, according to data compiled by INEGI. While 579,596 deaths were registered nationwide between January and June 2021 (110,312 more than those recorded in the same period of 2020), there were 5,357 deaths in Aguascalientes, of which 3,050 corresponded to men and 2,307 to women. GUANAJUATO During the last hours in Guanajuato, 982 new coronavirus infections were confirmed in the state. For the first time in days, it has fallen below 1,000. The infections are distributed as follows: Leon confirmed 373 more new cases, in Irapuato 151 contagions, Celaya 97 new cases, and Salamanca 87. With these new cases, the accumulated number of cases has increased to 247,255, of which 12,937 are active cases and can be contagious. Infectious disease specialist Alejandro Macias recently shared that national and even global infections are beginning to decrease, but it will not be until February that a decline can be identified.

MEASURES TAKEN BY STATES IN MEXICO

QUERETARO Queretaro climbed to sixth place in the incidence rate for active cases of COVID-19 at the national level with 9,564 detected infections, according to the technical report of the Ministry of Health. This Saturday, the state is ranked below Baja California Sur, Mexico City, Colima, Tabasco, and Nayarit, for the highest incidence rate per 100,000 inhabitants. Meanwhile, the Health Secretariat reported last Friday that there was a 36% hospital occupation in the state, so there are 206 people hospitalized, of which 65 were in serious condition. In addition, there were 8,706 people isolated at home with mild symptoms of the disease.

JALISCO The Ministry of Health of Jalisco (SSJ) informed that today there were 5,212 cases of COVID in the State. In addition, there were 15 deaths due to the disease. This means that 217 infections are confirmed every hour in Jalisco, according to information from Radar Jalisco. The total number of accumulated infections in Jalisco since the beginning of the pandemic is 481,669, and deaths total 18,005.

MEASURES TAKEN BY STATES IN MEXICO

STATE OF MEXICO The first quarter of the year will be especially complicated for the real estate sector in the Toluca Valley due to the fact that citizens have not achieved a real recovery in their purchasing power. In this regard, Berenice Garcia Zumano, president of the Association of Real Estate Professionals in this area (AMPI), regretted that the activity she represents continues to be one of the laggards in terms of recovery as a result of the COVID-19 pandemic. Therefore, she considered that this is the right time to get back on track by designing better strategies to motivate the purchase or rental of real estate. The businesswoman emphasized that within the sector she represents, there is still a question mark as to whether at some point there could be a return to the epidemiological traffic light. However, this is definitely a scenario that no one would wish for.

CDMX The head of the Digital Innovation Agency of the Government of Mexico City, Jose Merino, acknowledged that restaurants and neighbors are willing to put an order in CDMX, stating that 20 out of 23 points of neighbors were approved for the regulation of restaurants in Mexico’s capital. The official recalled that with the first wave of COVID-19 and after the closing of businesses for more than a month, which affected 400,000 jobs in the restaurant sector, the alternative was the “City in the outdoors” program that came into effect under certain rules to provide service on sidewalks and public spaces, which allowed the recovery of the sector avoiding the possibility of contagion. He referred that the authorities can issue emergent programs such as this one, given the sanitary risk. However, for it to remain and the authorities to agree, it will be necessary to modify the Law of Commercial Establishments.

ECONOMIC RECOVERY THE MEXICAN ECONOMY HAS A WEAK START TO THE YEAR: IMEF The Mexican economy had a “weak start” in 2022, indicated the Mexican Institute of Finance Executives (IMEF), as it interpreted its advance measurements of key indicators of manufacturing production, consumption, and services. The IMEF Manufacturing Indicator for January registered a 4.4 point drop with respect to December 2021, thus starting the year at a level of 48.8 units, placing it in the contraction zone for the first time since September 2021. The IMEF Indicator ranges from 0 to 100 points, and the level of 50 points represents the threshold between an expansion (greater than 50) and a contraction (less than 50) of economic activity. The IMEF Non-Manufacturing Indicator decreased 3.8 points in January to close at 49.0 units, which is the first time it has been in the contraction zone since August of last year. “The IMEF Manufacturing and Non-Manufacturing Indicator figures reflect a slow and generalized start during January by registering a reduction in all its components with respect to the close of 2021 (December),” said the IMEF in its monthly report. The indicators suggest a weak start of the economy that coincides with the growing number of COVID-19 infections with the new Omicron variant. It is worth noting that 100% of the IMEF Indicator sub-indices decreased during January. Consequently, for the IMEF, 2022 once again looks like a complicated year from the outset. On the one hand, the growing number of COVID-19 infections with the new Omicron variant is affecting various activities, such as airlines, with the absen-

SOURCE: El Economista

teeism caused by people who become infected and have to isolate themselves for a couple of weeks. In its most recent issue of its World Economic Outlook, the IMF cut its forecasts for world economic growth in 2022, highlighting downward revisions for the United States, Brazil, and Mexico. On the other hand, IMEF added as context; central banks are beginning to change their monetary stance, with the US Federal Reserve as the main protagonist, anticipating that it will soon begin a cycle of raising its benchmark interest rate and reducing liquidity in the markets. After reaching inflationary levels not seen in four decades, the Fed is preparing to ensure inflation returns to controlled levels close to the 2 percent target. Especially for emerging markets, the change in the monetary cycle seen coming in developed economies will produce a less benign financial environment than has been the case in recent years. In Mexico, the most recent indicators point to a weak economy. The timely estimate of GDP for the fourth quarter of 2021, published by INEGI, reveals that the Mexican economy contracted 0.3% after already showing a decline in the third quarter.

TOWARDS THE “NEW NORMAL”

DISTRIBUTION OF DEATHS PER STATE DUE TO THE PANDEMIC

INFORMATION UPDATED ON JANUARY 31, 2022 AT 19:00 HRS LOCAL TIME.

NEW CASES REPORTED: 12,521

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

CONFIRMED CASES: 4,942,590

NEW DEATHS REPORTED: 198

CONFIRMED DEATHS: 306,091

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 177.00

0 to 10.0 (6 states)

40.1 to 50 (0 states)

10.1 to 20 (14 states)

50.1 to 60 (2 states)

20.1 to 30 (6 states)

60.1 to 70 (1 states)

30.1 to 40 (3 states)

>70 (0 states)

Elaborated by Prodensa with information from the Health Ministry of Mexico

PANDEMIC’S SITUATION IN THE WORLD • As of January 31, 2022, globally there have been reported 373,229,380 confirmed cases (2,657,167 new cases) of COVID-19 and 5,658,702 deaths (9,312 new deaths*). Lethal rate: 1.5%. In the last 14 days, 45,328,327 cases were reported globally.

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

TOWARDS THE “NEW NORMAL” INCIDENTS OF CONTAGIONS IN THE POPULATION BY REGION AS OF JANUARY 31

DEATH INCIDENTS IN POPULATION BY REGION AS OF JANUARY 31

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

EHS

WHEN TO STAY HOME

CALCULATING QUARANTINE

IF • • • • •

YOU Were exposed to COVID-19 and are up-to-date on COVID-19 vaccinations No quarantine You do not need to stay home unless you develop symptoms. Get tested Even if you don’t develop symptoms, get tested at least 5 days after you last had close contact with someone with COVID-19.

Watch for symptoms • Watch for symptoms until 10 days after you last had close contact with someone with COVID-19. • If you develop symptoms • Isolate immediately and get tested. Continue to stay home until you know the results. Wear a well-fitted mask around others. Take precautions until day 10 • Wear a mask • Wear a well-fitted mask for 10 full days whenever you are around others inside your home or in public. Do not go to places where you are unable to wear a mask. • Avoid travel • Avoid being around people who are at high risk

DAVID ANTUNEZ Environmental, Health, and Safety Director.

LABOR

ALVARO GARCIA HR, Vice President

NEW DEMOCRATIC PROCESSES A new union democracy model comes into action in Mexico. Key changes to the Mexican constitution and the federal labor law now require workers to vote via secret ballot to elect their union leaders and to support the contents of their collective agreements. Also, workers are now required to vote when a union pretends to sign a new collective bargaining agreement. This week relevant voting processes are taking place in Mexico. Some of these votes are being implemented under innovative systems that include a digital platform for remote labor voting. Companies must be prepared for future elections at their workplaces, to be executed with no work interruptions and under the organization of the new federal center.