MexECON Blog

August Fixed Investment Falls 0.4 Percent

Gross fixed investment in Mexico fell by a seasonally-adjusted 0.4% in August, erasing much of its revised 1.3% gain in July and marking its first decline since March.  According to the report, from the official statistics agency INEGI, the decline in August reflected a 0.1% fall in new machinery and equipment investment and a 0.5% decrease in construction.  On an unadjusted basis, total fixed investment in August was up 10.6% from the same month one year earlier.

Comment:  The August investment decline almost certainly reflects the sharp slowdown in the key developed economies, which in late summer not only became apparent but also created near panic in global financial markets.  In such an unstable environment, it should be no surprise that some Mexican investment projects were delayed.  Fixed investment in Mexico remains relatively high, as shown by the strong year-over-year increase in August, and it still appears to have some momentum.  Nevertheless, slower growth overseas and weaker exports will probably keep weighing on Mexican investment in the near term, and risks remain weighted to the downside.

Patrick Fearon, CFA
Vice President, Fund Management

                                     Gross Fixed Investment in Mexico
                                      Seasonally Adjusted, 2003 = 100
                                                     Source:  INEGI
Fixed Investment 1108

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