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New Market Study Published: Mexico Infrastructure Report Q4 2012

New Construction research report from Business Monitor International is now available from Fast Market Research


Boston, MA -- (SBWIRE) -- 11/08/2012 -- BMI View: Mexico's construction industry continues to progress along a robust growth path. The outlook is amongst the most stable in the Latin America region, and this is reflected in our infrastructure risk/reward ratings (RRRs), where Mexico takes the top spot in the region. The election of Enrique Pena Nieto spells further good news for construction sector growth, given his history as governor of the State of Mexico, where he presided over an ambitious infrastructure build-out and attracted private investors. We anticipate growth to remain around the 4-5% level over the medium term, incorporating around a 0.5% increase as a result of the election (based on campaign pledges), with further upside once Nieto takes office and releases his National Development Plan for the country.

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Mexico's construction industry is on track to post robust growth in 2012. H112 real growth came in at 5% year-on-year, continuing the above 4% trend seen since H211; however, we expect growth to slow over the year, and thus maintain our full year growth rate of 4.1%. The country saw a strong rebound in 2011, of an estimated 4.8%, following two years of contractionary growth and a year of no growth. Therefore, the continuation of growth exceeding 4% is a good sign for the industry's medium-term recovery. 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, as well as a post-election spending slowdown. Planned investments for the year are down by around 10%, which will impact both 2012 and 2013 industry value-added.

New President, More Infrastructure

From 2013, we expect growth to accelerate slightly, and have factored in a 0.5% increase based on the election of Nieto, with real growth of 4.6% anticipated for the year. Based on campaign pledges that outlined a number of transport and social infrastructure projects, as well as his infrastructure-focused policies whilst governor of the State of Mexico, we believe Nieto will be a positive force for Mexico's infrastructure sector.

It is yet unclear how a number of programmes put in place by Calderon, such as the Second National Infrastructure Plan (NIP) (which outlines US$400bn investment over the 2013-2018 period) and FONADIN, will be continued under Nieto, although we anticipate a strong level of policy continuity. Nieto has called for a greater private sector role in the economy and presided over the country's first healthcare public-private partnership (PPP) in the State of Mexico. For this reason, we expect the PPP law (approved in January 2012) to gain significant traction under Nieto.

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