May Sees Slight Recovery in Mexico’s Investment Activity

In May 2025, Mexico’s gross fixed capital formation, which encompasses total investments in machinery, transportation equipment, and construction by economic agents, increased by 0.9% compared to the previous month. However, this growth was insufficient to offset the 1.6% decline observed in April, according to the latest INEGI report.

This modest monthly improvement slightly alleviated the annual contraction, which stood at 6.7% in May, an improvement from 7.6% in April, marking the ninth consecutive year-on-year decline. The rebound was primarily driven by the construction sector, notably residential construction, which registered a monthly increase of 7.8%. In contrast, non-residential construction, predominantly public infrastructure projects, declined by 4.4%.

Investment in machinery and transportation equipment remained largely unchanged, with expenditures on domestically produced goods rising by 3.4%, while imports decreased by 1.8%.

These trends continue to be influenced by uncertainty surrounding US trade policies, with ongoing negotiations from May to July, as well as domestic reforms in Mexico, including judicial reforms, that may affect the business environment.

Moreover, the Mexican government’s efforts to reduce the fiscal deficit, from 5.7% of GDP in 2024, the highest in nearly three decades, to a projected 3.9% in 2025, have required substantial cuts in public investment. Between January and May 2025, gross fixed capital formation declined by 7% year-on-year, a marked slowdown compared to 9.6% growth during the same period in 2024. This contraction was primarily driven by a 22.2% reduction in public investment, while private investment decreased by 5%, reversing the 9.8% increase recorded the previous year.