MexECON Blog

July Fixed Investment Rises 1.0 Percent

Today, the MexECON Blog initiates coverage of Mexico's gross fixed investment, a series published monthly by the official statistics agency INEGI.  According to the latest report, released on Tuesday, fixed investment in Mexico rose a seasonally-adjusted 1.0% in July.  However, the increase reversed only about half the 1.9% decline in June.  Mexican fixed investment has only risen in six of the last twelve months, producing little appreciable change.  On an unadjusted basis, fixed investment in July was up just 0.8% from the same month one year earlier, after a 0.7% increase in the year to June.

Comment:  The overall Mexican economy continues to grow at a good pace, primarily on the strength of rapidly rising exports.  However, investment remains flat.  In fact, gross private fixed investment in Mexico has not increased on a sustained basis since early 2008.  The failure of investment to recover reflects a range of problems, from a continuing credit crunch to increased violence by drug cartels.  The danger is that Mexico's current economic rebound will not be on a truly firm foundation until exports, consumer spending, and investment are all growing at a healthy pace.

Patrick Fearon, CFA
Vice President, Fund Management

                            Gross Fixed Investment in Mexico
                              Seasonally Adjusted, 2003 = 100
                                            Source:  INEGI
Fixed Investment 1007

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