MexECON Blog

July Fixed Investment Rises 0.9 Percent

Gross fixed investment in Mexico rose by a seasonally-adjusted 0.9% in July, accelerating from an increase of just 0.3% in June.  According to the report, released today by the official statistics agency INEGI, investment in domestically produced machinery and equipment jumped 1.0% in July, while construction activity increased 0.8%.  Investment in imported machinery and equipment fell for a third straight month, posting a decline of 0.3%.  On an unadjusted basis, total fixed investment in July was up 6.6% from the same month one year earlier.

Comment:  The Mexican economy stuttered in late spring and early summer, responding to the latest financial scare out of Europe and a slowdown in U.S. economic growth.  However, it is now abundantly clear that the economy quickly regained its footing.  Investment is one area that has certainly recovered, and it can probably keep growing in the near term.  However, other sectors of the economy are at increased risk.  I have said repeatedly that renewed economic slowing abroad could undermine Mexican exports.  Now, accelerating inflation threatens to dampen consumer spending as well.  It still looks like the Mexican economy will keep growing at an above-average rate in the near term, but risks are accumulating.

Patrick Fearon, CFA
Vice President, Fund Management

                                      Gross Fixed Investment in Mexico
                                         Seasonally Adjusted, 2003 = 100
                                                     Source:  INEGI
Fixed Investment 1207

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