Mexico's Gross Fixed Investment has its biggest plunge since 1995

08/03/2021

In 2020, the year of the pandemic, public and private investment (Gross Fixed Investment) collapsed -18.2%, the worst level observed since 1995 when it fell -35.8% as a result of the 1994 economic crisis in Mexico. Investment in construction reported a drop of 17.4% in 2020 compared to 2019, and in machinery and equipment for the production of goods went down to -19.3%, informed this Friday the National Institute of Statistics and Geography (Inegi).

Investment for residential construction fell to -15% and non-residential -19.7%. Investments in the transportation equipment sector, dedicated to the manufacture of cars and airplanes, were the ones that fell the most in Mexico, with -23.5% nationally, and -35.3% of foreign capital in this same sector. In seasonally adjusted figures, the drop is 12.9% for the whole of 2020.

However, there are factors that can help the recovery of investment "it is expected that the expansion of investment in machinery and equipment in the United States may be relevant for manufacturing production in that country and Mexico in the coming months, which would be in line with our expectation of strength in Mexican exports in 2021," shared Citibanamex in its daily economic report.

An analysis by Banco Base mentioned that during the week the reform to the Electricity Industry Law was approved in the Senate, deteriorating the business environment in the country and creating conditions for a slow recovery of investment.

By Mexicanist