MexECON Blog

January Fixed Investment Jumps 2.2 Percent

Gross fixed investment in Mexico jumped by a seasonally-adjusted 2.2% in January, after a revised increase of 1.0% in December and a flat reading in November.  The increase in January was the sixth rise in the last seven months, and it was the strongest expansion since June 2009.  According to the report, from the official statistics agency INEGI, the rise in January primarily reflected an increase of 5.3% in machinery and equipment investment.  Construction activity rose just 0.5%, though that was enough to mark the fifth straight rise in this lagging sector.  On an unadjusted basis, total fixed investment in January was up an impressive 9.2% from the same month one year earlier.

Comment:  Fixed investment in Mexico continues to recover, though from a very low base.  The rise in investment is important because it complements the budding recovery in domestic consumption spending and the continuing boom in Mexican exports.  Nevertheless, investment will need to accelerate much more in order to truly contribute to Mexican economic growth.  It would need to rise dramatically for a sustained period in order to keep Mexico's economy growing at its current robust rate over the long term.

Patrick Fearon, CFA
Vice President, Fund Management

                       Gross Fixed Investment in Mexico
                  Seasonally Adjusted, 2003 = 100
                              Source:  INEGI
Fixed Investment 1101

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