Sugar Tax Legislation Progresses
News: Legislation to introduce taxation on certain soft drinks and packaged foods in Mexico has been approved by the country's Chamber of Deputies, Forbes reports. The proposals have been introduced as a means to tackle widespread obesity issues within the country. If ratified, the legislation would impose an MXN1 (US$0.08) per litre tax on heavily sweetened soft drinks, as well as a 5% excise tax on high-calorie packaged food items such as crisps, peanut butter and sweetened breakfast cereals. The proposals will now be considered by the Mexican Senate, and it is expected that both measures will be approved.
BMI View: We have adjusted down our real GDP growth forecast for Mexico for 2013, from 3.6% to a below-consensus 3.0%. There is the potential for an uptick in imported inflation to hamper private consumption. However, we remain confident that growth will accelerate in 2014, in large part due to the positive effects associated with a stronger US economy. As a consequence, we expect a strong upturn in Mexican consumer confidence levels in 2014, which will see household spending accelerate.