Mexico Construction Industry Projected to Grow 2.6% Through 2029

The Mexican construction industry is projected to grow by an annual average of 2.6% between 2026 and 2029, according to ResearchAndMarkets. According to the Mexico Construction Industry 2025-2029 study, this expansion is supported by strategic investments in energy and transportation infrastructure, including federal plans to deploy over MX$1.2 trillion (US$69 billion)for thousands of kilometers of railway and road developments. While public investment and civil works faced a contraction in early 2025, private residential building has maintained growth, aided by a rebound in bank lending.

The sector currently contributes approximately 7% to the national GDP and is undergoing a technological transition to meet global demands for efficiency and transparency. Digitalization has accelerated, with more than half of industry companies now digitalizing between 51% and 75% of their processes. This shift facilitates the early integration of data analysis, automation, and ESG criteria into project lifecycles.

Regional performance varies, with Queretaro reporting a 3.8% increase in construction value by June 2025 after an earlier contraction. The state is currently ranked as the third-largest entity for telecommunications infrastructure construction and holds the 11th position in total national production value. Quintana Roo and Campeche lead the country in production value, accounting for 11.7% and 5.8%, respectively.

Industrial policy and government spending continue to influence the sector's trajectory. Plan México aims to develop over 3,000km of passenger train lines by the end of the current administration, including routes connecting Mexico City to Queretaro, Pachuca, and Nuevo Laredo. These projects are designed to lower transport costs and improve national mobility, providing long-term opportunities for engineering and construction services.

BBVA Outlook: Contraction Amid Shifting Investment Cycles

Mexico’s construction sector entered mid-2025 in a state of contraction, with GDP down 1.1% year-on-year, primarily due to a significant reduction in public infrastructure spending. According to the BBVA Research report, Real Estate Situation Mexico, 2H25, this decline is directly linked to a 12.6% real cut in federal funding for public works compared to the previous year. This fiscal tightening resulted in a 15.5% drop in total production value and a notable slowdown in employment generation, with the sector losing approximately 200,000 jobs as formal positions fell to 1.7 million. While private residential construction remains a stabilizing force, growing 4.9% and marking 11 consecutive quarters of expansion, this momentum has not been sufficient to offset the 24.6% fall in civil works experienced during the first half of the year.

Despite these immediate challenges, market analysts anticipate a gradual recovery starting in 2026. This potential rebound is supported by a projected 8.6% real increase in the public infrastructure budget (PPEF 2026), which aims to reactivate stalled civil works projects and stabilize the industrial labor market.

Furthermore, a mismatch persists between the current supply and a potential demand for 7.5 million homes, of which over 40% represents traditional housing needs. Experts suggest that as bank lending for residential construction continues its mild recovery, rising to MX$320 billion by mid-2025, the sector could return to positive growth if public-private housing initiatives effectively target regions with high unmet demand.