"Construction in Mexico - Key Trends and Opportunities to 2017" Published

The Mexican construction industry recorded a CAGR of 4.34% during the review period. This was supported by private and public investment in Mexican infrastructural, commercial and institutional construction projects. The outlook for construction is favorable, as a result of the government's focus on infrastructure and residential construction. The construction industry's output is expected to record a CAGR of 6.49% over the forecast period. GDP growth is expected to slow to 3.5% and 3.4% in 2013 and 2014 respectively, due to weaker exports growth, on the back of a sluggish recovery in the US economy. The economy is expected to improve gradually thereafter and will post 3.6% growth, on an average, for the following three years, supported by an improvement in domestic demand and exports demand.

Key Highlights

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* Total construction output in real terms has expanded rapidly, growing by 11.1% in 2011 and 8.2% in 2012, following two years of contraction. Having almost recovered to pre-crisis levels, Timetric expects the expansion to moderate in the coming quarters, with full year growth coming in at 5.7% in 2013. Prospects for the medium-term remain bright, underscored by speculation of an ambitious second National Infrastructure Plan (NIP) for 2013-2018 and the implementation of a new PPP law in January 2012.
* Commercial construction has a positive outlook, supported by tourism-related construction and heightened demand for office space, particularly class-A buildings. Rising income and a growing young population will also incentivize retail space expansion. The industrial sector has grown in part due to access to the US, prompting the emergence of industrial parks in the northern and central parts of the country.
* The World Economic Forum's "Global Competitiveness Report 2012-2013" ranks Mexico 65th out of 144 economies in terms of total infrastructure quality, up by eight points from its 2011-2012 rank. The country's 'quality of port infrastructure' rank improved from 75 in 2011-2012 to 64 in 2012-2013, while the 'quality of railroad infrastructure' rank improved eight places, to reach 60 in 2012-2013.
* Mexico's unemployment rate eased from 5.5% in 2009 to 5% in 2012, suggesting a gradual improvement in the labor market. Declining labor costs brought about an increase in the total number of employed persons from 46.6 million in 2011 to 48.1 million in 2012, showing a growth of 3.3%. The unemployment rate is expected to average about 4.4% to 4.8% in the next five years.
* The public sector's budget deficit widened marginally from 2.5% in 2011 to 2.6% of the GDP in 2012, as revenue growth moderated to 7.5% in 2012 (down from 10.5% in 2011). The government's expenditure grew by 8% in 2012, marginally lower than the 8.9% growth in 2011.

Scope

This report provides a comprehensive analysis of the construction industry in Mexico:

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