Mexico’s Investment Slump: Fixed Capital Drops for 10 Months

In June, gross fixed investment in Mexico fell 1.4% compared to May, marking the third decline of the year, according to INEGI. Measured through the Monthly Fixed Capital Formation Indicator (IMFBCF), the investment level was 6.8% lower than in June 2024, representing its tenth consecutive monthly drop.

Overall, the index accumulated a 6.9% decline during the first half of the year, the first January–June contraction since 2020, when it fell 20.1% amid the pandemic.

This decline follows two years of rapid growth, driven by strong public investment and private sector optimism, fueled in part by the relocation of productive assets from Asia to North America.

The slowdown in Mexico’s aggregate fixed investment contrasts with a 10.2% increase in FDI into the country during the first half of the year, totaling US$34.3 billion.

June’s contraction reflected weakness in its two main expenditure components: machinery and equipment, down 1.6%, and construction, down 0.8%. Within machinery and equipment, the steepest drop came from domestically produced machinery (-4.8%). In construction, residential buildings, largely private investment, fell 2%, representing the sharpest decline.

On a half-year basis, the overall fall in investment highlights the pronounced weakness in public investment, down 22.8%, while private investment decreased 4.8%.