The construction sector is probably experiencing one of its most difficult periods, with COVID-19 still affecting companies through constant increases in material costs, high interest rates and lacking investment in infrastructure. Industry experts warn that this situation might not change before 2025.
According to Ricardo Trejo, Director General, Forecastim, the construction sector’s GDP is 10 percent below the levels registered in 2019, before the COVID-19 crisis broke out. He added that the downturn trend is expected to continue with a stable 2022 and with negative growth of 1 percent in 2023. “We do not see a recovery in the near term. We have a stagnated industry and potential negative indicators for next year, which makes us believe that we could reach pre-pandemic levels until 2024-2025,” Trejo added.
According to Fernando Solares, President, Mexican Chamber of the Construction Industry (CMIC), due to the industry’s slowdown between August and October, growth could only reach 2 percent year-on-year in 2022.
Under the López Obrador administration, investment in infrastructure is not expected to increase. According to the Ministry of Finance (SHCP), public investment in this sector will represent 3.6 percent of the GDP, which will result in an average of 2.94 percent for the period between 2019 and 2023. In contrast, Enrique Peña Nieto’s administration invested over 3.9 percent of the GDP in infrastructure, as reported by MBN.
Some sectors are complaining about major infrastructure projects like the Mayan Train since, according to them, they benefit only major developers. However, according to Carlos Serrano, Chief Economist, BBVA, the 1 percent growth that the construction industry will see in 2023 will be driven by civil works following an increase in budget for this area of 20 percent. “[Civil works] is the subsector that will contribute the most to the industry. We do not see the housing sector growing as demand for new houses has not increased. There is demand, but only for second hand houses,” Serrano said.