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