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Foreign trade: Mexico raises its tax collection

Mexico registered an increase of 9.2% year-on-year in its tax collection for foreign trade in 2021, to 999,000 million pesos, reported the Ministry of Finance and Public Credit (SHCP).

The data includes the collection reported by the Customs Assistant plus Foreign Trade Taxes (IGI and IGE) reported by the ADRs and the Federal Entities.

While Mexico’s merchandise exports grew 18.5% in 2021, to 494,224.5 million dollars, Mexico’s imports totaled 505,715.6 million dollars, an increase of 32.1%, at annual rates.

Tax collection of foreign trade. January-December Billions of pesos of 2021Mexico registered an increase of 9.2% year-on-year in its tax collection for foreign trade in 2021, to 999,000 million pesos, reported the Ministry of Finance and Public Credit (SHCP).

The dependence of the Mexican economy on external demand has expanded Mexico’s current account surplus to historical levels.

Relatively strong foreign demand from the United States dampened Mexico’s exports, while fiscal austerity in Mexico failed to support domestic demand, resulting in a compression of imports.

Mexico’s trade surplus for goods and services was $20 billion (1.7% of GDP) in the four quarters through June 2021; in particular, its bilateral surplus of goods and services with the United States during the period reached 116,000 million dollars, the second largest after China and 19% more than at the end of 2019, according to data from the Federal Reserve.

In addition to the high goods surplus, a record inflow of remittances has boosted the current account surplus, which reached 2.9% of GDP over the same period.

Prior to 2020, Mexico had not run a current account surplus since 1987.

Foreign trade

From the Fed’s perspective, once pandemic conditions improve, economic normalization is likely to result in some recovery in domestic demand, and thus imports, leading to some degree of rebalancing in the current account.

However, growing informality in labor markets and a deteriorating investment climate are likely to weigh on domestic sources of growth, keeping the current account above its long-term average.

The Treasury Department assesses that in 2020, Mexico’s external position was stronger than justified by economic fundamentals and desirable policies, with an estimated current account gap of 3.0% of GDP

Tax collection for foreign trade in Mexico was 1 trillion 059,000 million pesos in 2019 and 1 trillion 070,000 million in 2018.

 

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