The Day at a Glance | June 15 2021

The Top

*Retail sales contracted more than estimated in the United States (-1.3% May vs 0.8% e.).

*Fiscal reform in Mexico will take form of a Fiscal Miscellaneous Bill and will be presented in September, along with the 2022 Economic Package: Raquel Buenrostro.

*EU prepares issuing 20 billion euros of debt in order to fund its recovery; it will issue over 80 billion this year.

*United States and the EU will announce a truce regarding their trade dispute due to Boeing and Airbus subsidies.

*Economic indicators: Inflation for producers increased 6.6% annul in the United States.

Economic environment

Retail sales in the United States contracted during May. Retail sales in the United States contracted more than estimated during May and pointed to a thinning down effect in the implemented fiscal stimuli. Sales contracted (-) 1.3% during the month, above the estimated 0.8%. At an annual rate, they logged a 24.4% recovery. Sales in April were revised upwards (0.9% vs -0.1% prev.) and May`s data show a recovery in the consumption of services as the economy was reopening. Demand for goods and merchandise has started to become more moderate, especially regarding construction, motor vehicles and electronics; while demand is increasing for restaurants, bars and other services. The contraction in consumption seems to appear after two months of extraordinary growth due to the fiscal stimuli that was carried out; its effects have started to thin down. More moderate consumption along with a slow recovery in employment both contribute to decrease inflationary risks.

The Mexican Tax Administration System (SAT for its initials in Spanish) will propose a new Fiscal Miscellaneous Bill in September. According to statements made by the SAT`s head, Raquel Buenrostro, a Miscellaneous Bill will be presented along with the 2022 Economic Package with the intention of carrying out some fiscal changes that are incorporated in the 2022 Income Law. According to Buenrostro, the modifications would take shape of a “fiscal miscellaneous” bill, and will not increase taxes for employees. The SAT proposes it would simplify tax payments and make changes in the legal framework in order to avoid discrepancies with large contributors. Efforts are aimed to collect more from large contributors and fight informality. Buenrostro estimates that the changes could represent up to 200 billion in revenue for the government (or 1% of GDP). Buenrostro assured that it will not be a fiscal reform as it will not increase taxes, but rather ensure the primary collection of taxes.