MexECON Blog

December Fixed Investment Rises 0.7 Percent

In a Friday report from INEGI, the official statistics agency, Mexico's December gross fixed investment rose by a seasonally-adjusted 0.7%, easily reversing the revised 0.1% decline in November.  The figures for every month from August through November were revised higher.  The report indicated the increase in December stemmed mostly from an rise in equipment and machinery investment.  Construction activity was barely changed.  On an unadjusted basis, total fixed investment in December was up 5.4% from the same month one year earlier.

Comment:  Fixed investment in Mexico is clearly on the upswing now, providing a welcome third leg to an economic rebound that has heretofore relied on exports and, more recently, domestic consumption.  Much of the increase in investment has been in machinery and equipment, but as financial conditions stabilize, construction activity is also starting to strengthen.  The gains are especially impressive given the increase in violence by drug cartels.  That violence is probably keeping investment lower than it otherwise would be.  Despite its recent growth, however, investment still needs to rise much faster, and in the long term, Mexico needs to boost investment dramatically above its historical rate if overall economic growth is to remain high.

Patrick Fearon, CFA
Vice President, Fund Management

                         Gross Fixed Investment in Mexico
                          Seasonally Adjusted, 2003 = 100
                                         Source:  INEGI
Fixed Investment 1012

0 comment(s) for “December Fixed Investment Rises 0.7 Percent”

    Leave a Comment

    Name:
    Website:
    Comment:

    Archive