Economics: Despite the multi-year fall in construction activity, a new footing is unlikely in the near term
GDP results for the third quarter came in stronger than analysts had anticipated largely owing to a considerable expansion of services and an extension of manufacturing’s positive trend as some of the highest-value-added branches posted improved numbers. However, the construction industry remains deeply depressed.
Construction declined sharply in 2020, but since late 2016 and early 2017 there had already begun a steady erosion of building and civil engineering works. Setbacks in the case of public infrastructure have included major declines in projects of fundamental importance such as roads, water distribution, irrigation and sanitation works, among others, at the same time as there has been growth in the areas of refineries and rail transport that are confined to two signature administration projects (the Maya Train and Dos Bocas refinery) of very limited social profitability. Activity also remains low in the residential building segment, and we estimate that this will continue to be the case over the medium term given the contraction in Infonavit's credit portfolio, greater obstacles to accessing bank mortgages, and the uncertainty surrounding next year’s economic environment.
In this report, we analyze the construction sector’s trajectory over past years and the very latest results, as well as its prospects for the coming year.
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