Industrial Production Slows Down in Mexico in 2023: CEESP
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Industrial Production Slows Down in Mexico in 2023: CEESP

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Emilio Aristegui By Emilio Aristegui | Junior Journalist and Industry Analyst - Wed, 03/22/2023 - 11:21

The Center for Economic Studies of the Private Sector (CEESP) explained that industrial production in Mexico is facing a slowdown due to a lack of investment in construction. The organization is urging the government to invest in the industry to promote its growth. 

CEESP presented its beginning of the year report for industrial production in Mexico on March 20, 2023, highlighting that production did not grow in the first months of 2023. This issue was attributed to a drop in construction and what experts forecast as a possible downturn in foreign investments in infrastructure projects, explained CEESP via its report. 

In January 2023, industrial production failed to grow in Mexico after three consecutive months reporting increases. However, production did increase in comparison to January 2022 by 2.5%. CEESP explained that according to a report by the National Institute of Statistics and Geography (INEGI) the production industry reported a decrease of 0.01% in comparison to December 2022, while the institute had forecasted a 0.05% increase. 

CEESP explained that construction fell 1.0% at a monthly rate, mainly due to a setback of 8.6% in civil engineering construction infrastructure. Experts explained that the major concern of the setbacks relies on the possibility of a new investment stagnation. CEESP attributed contractions in public investments as a possible factor for the investment drop, basing its reasoning behind financial information on public expenditure on the industries. 

CEESP explained that industrial production in January reflected dynamism in the manufacturing industry based on export results for the period. However, domestic demand has struggled to maintain healthy levels. Reactivations are expected for export-oriented regions in the country, which are likely to benefit from investment preferences due to nearshoring. 

Tabasco and Chiapas have stood out among the federal entities with the highest GDP growth in industrial production, which according to CEESP is not enough to drive national dynamism. “Despite the significant advances in these South-Southeastern states, their impact on a national level is reduced if it is considered that together they represent only 4.3% of the total economy, significantly less than the most representative entities,” explained CEESP. 

Most construction activity in Mexico takes place in Mexico City, with 17.6%. The State of Mexico is in second place with 9.1%, followed by Nuevo Leon with 7.7% and Jalisco with 6.9%, according to the report. CEESP urged the government to implement conditions for the flourishing of productive investment in Mexico through policies that bring certainty to investors.

Photo by:   Image by 652234 from Pixabay

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