Poverty in Mexico

Give a man a fish and he will eat today. Teach him to fish and he will eat for the rest of his life. “

― Proverb chino

Poverty in Mexico was already high before the COVID-19 pandemic. According to the National Council for the Evaluation of Social Development Policy (Coneval), in the country 4 out of 10 people lived in poverty in Mexico before COVID-19.

After the pandemic, poverty indicators worsened, rising from 41.9 percent to 43.9 percent between 2018 and 2020, which means that the number of people living in poverty increased from 51.9 to 55.7 million.

It is worrying that the lack of access to health services increased by 12 percentage points, although the damage was greater in the absence of fiscal and monetary support, informality and low spending on health, were associated with negative effects on inequality .

The substantial gap in Internet coverage for children of all income groups could lead to school dropouts and widen educational gaps, leaving a long-term impact on the adequate preparation and accumulation of human capital, their employment prospects and their incorporation into inclusive growth.

Despite electoral propaganda, the proportion of income that went to the poorest households in 2018 was lower than the average for emerging countries. Around 40 percent of households with adolescent children and heads of household of working age did not have social protection in 2018, a figure higher than the Latin American average.

There are notable deficits in spending on education and health, spending per student is well below the OECD average, as is the teacher-to-student ratio and the PISA score.

In the country, there is substantial variation in the results and quality of education between states, with a strong correlation between per capita income and literacy rates.

There are also significant gaps in internet use by income group, one of the highest in the OECD. Similarly, public spending on health was much lower than the OECD average, with a substantial variation in access to medical care among the States.

Consideration should be given to the possibility of improving the orientation of public spending on infrastructure, which facilitates and encourages private investment, generating employment and wealth.

Social programs in Mexico have significant gaps in their coverage, prioritizing their electoral orientation with overlaps in the lists of beneficiaries and programs.

Weaker-than-expected economic activity in the third quarter, and downside risks arising from the increase in Ómicron cases, justify greater caution in the short term.

The first case of Ómicron in Mexico was announced in early December, which coupled with the lack of travel restrictions could lead to a new wave of Covid during the Christmas holidays.

Even if the new variant does not pose a more serious threat to health, the restrictions implemented in most countries suggest that the start of 2022 will be weak.

Domestic inflationary pressures are not diminishing as fast as expected and the recent depreciation of the peso will amplify international shocks.

The appointment of Victoria Rodríguez Ceja as governor of the Bank of Mexico, clouds the prospects for monetary policy and the insertion of Mexico in the International Financial System.