MexECON Blog

August Fixed Investment Falls 0.9 Percent

Gross fixed investment in Mexico fell by a seasonally-adjusted 0.9% in August, just about erasing the revised increases of 0.6% in July and 0.3% in June.  According to the report, released Wednesday by the official statistics agency INEGI, investment in machinery and equipment was unchanged in August, but construction activity dropped 1.9%.  The decline in construction was the sharpest since February.  On an unadjusted basis, total fixed investment in August was up 3.7% from the same month one year earlier.

Comment:  With the U.S. economy still growing, albeit slowly, and with domestic demand remaining on an uptrend, the pullback in Mexican investment during August is not too worrying.  The most likely scenario going forward is for the Mexican economy to keep growing at a good pace.  Nevertheless, risks are accumulating.  The main risks are that the European debt crisis could worsen again, economic growth in the major developed countries could continue to slow, U.S. politicians could fail to head off a programmed fiscal tightening at year's end, and rising inflation in Mexico could sap consumer demand.

Patrick Fearon, CFA
Vice President, Fund Management

                                         Gross Fixed Investment in Mexico
                                           Seasonally Adjusted, 2003 = 100
                                                       Source:  INEGI
Fixed Investment 1208

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