Gross Fixed Investment in Mexico with the Highest Growth Since 1993

Gross Fixed Investment in Mexico continued its positive performance in August, growing by 31.5 percent annually.

Gross Fixed Investment in Mexico was boosted by the construction sector, a result of the federal government’s flagship projects and nearshoring.

Nearshoring has driven the creation of industrial spaces. Seasonally adjusted data from INEGI indicates that the advance in Gross Fixed Investment in Mexico in August would be the highest since 1993.

In that year, 1993, the records began, excluding the rebounds in April and May of 2021 of 43.8 and 43.9 percent annually, respectively, which occurred due to the closure that took place a year earlier due to the pandemic.

Axel González, an analyst in Mexico, explained that this trend will persist for the rest of the year due to the adjustment made by INEGI regarding the change in the base year and the materialization of investment announcements.

“This is when this investment is transformed, as we colloquially say, into ‘iron,’ and this is what is measured in this indicator of gross fixed capital formation. Towards the end of 2023, it is expected that this dynamism will continue,” González told El Financiero Bloomberg.

Nearshoring Drives Gross Fixed Investment in Mexico

In this regard, construction recorded an expansion of 47.4 percent annually in August, mainly driven by non-residential construction, which saw a 96.2 percent increase, its highest in history, while residential construction contracted by 1.5 percent.

In machinery and equipment investment, the advance was 15.9 percent annually, with domestic investment rising by 10.9 percent and imported investment by 19.0 percent.

Analysts at Deutsche Bank emphasized that behind the impetus of Gross Fixed Investment in Mexico are the government’s infrastructure project portfolio and the expansion of production capacity resulting from the nearshoring campaign.

“As the administration continues to push to complete infrastructure projects before the elections and investment continues to flow due to nearshoring, we expect gross fixed investment to extend its dynamic performance into the next year,” the bank noted.

Regarding the construction sector, which has been driving investment, a complex outlook is foreseen as the federal government’s flagship projects will be completed next year.

For the entire year, Banco Base expects Gross Fixed Investment to show a 23.0 percent increase this year; in the first eight months alone, the accumulated growth is 21.8 percent according to original figures.

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