Recently published research from Business Monitor International, "Mexico Infrastructure Report Q3 2012", is now available at Fast Market Research
Boston, MA -- (SBWIRE) -- 08/02/2012 -- BMI View: We anticipate that Mexico's construction industry will continue to make a steady recovery from the recession which took hold in 2008. While there remain weaknesses in the market, the outlook is more stable than many others in the region, with private investment expected to grow in light of the new PPP law. Over the medium term, the promise of a second National Infrastructure Plan, which will look to tap alternative sources of financing, is underlying our annual average construction industry value growth forecast of 4.3% between 2012 and 2016.
Mexico's construction industry is on track to post robust growth in 2012. Q112 real growth came in at 4.9% y-o-y, continuing the above 4% trend seen since H211, however we expect growth to slow over the course of the year, and thus anticipate full year growth to come in around 4.1%. Given the strong rebound seen in 2011 (4.8%), following three years of no growth, the continuation of plus 4% expansion is a good sign for the industry's more medium term recovery.
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Despite this bullish outlook, the trend is for growth to gradually slow. The primary cause will be a reduction in government investment into infrastructure, following an accelerated level of investment in 2011. Planned investments for the year are down by around 10%, which will impact both 2012 and 2013 industry value added. However the slowdown is less marked due to an expected increase in private investment facilitated by the new PPP law. With a number of concessions, both transport and utilities, coming to market this year, we expect strong take up for the well designed ones. However, Mexico continues to struggle with poor planning for infrastructure investments, pushing projects which will struggle to attract investors (such as the Punta Colonet port which was put back on the table by CMIC earlier in 2012).
Key Factors Guiding Our Forecast:
- The National Infrastructure Plan (2007-2012) is in its final year and the government will be keen to push through as many projects in the last year as possible to make some success of it, especially considering that the plan is significantly behind schedule and under budget. However, public sector spending in 2012 has already been reduced compared to 2011, and therefore it is not clear how much leeway the government will have to push through projects, especially in an election year.
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