Mexico’s Gross Fixed Investment collapses 21.2% in July.

The pandemic effects and the lack of trust in AMLO’s government had a severe impact on this indicator.

MEXICO (EFE) – Mexico’s Gross Fixed Investment Although it recovered from the second quarter, it registered a substantial fall of 21.2% in July 2020 compared to the same period last year, dragged down by the coronavirus crisis, according to data from the National Institute of Statistics and Geography (Inegi).

Inegi announced today, Tuesday, October 06, 2020, that this result was obtained due to the fall of 23.7% in the construction sector and 18% in the machinery and equipment sector.

According to data adjusted for seasonality, gross fixed investment grew 4.4% last July compared to the previous month, because of the 11.1% increase in machinery and equipment and a 1.1% increase in construction.

“After the severe collapse in the April and May 2020 confinement, gross fixed investment rebounded 20.1% with the new normality of June and slowed down its recovery by advancing 4.4% in July. It is still -21.2% year on a year below July 2019,” Julio A. Santaella, Inegi’s president, said on Twitter.

July was the second month of the so-called new normality, a cautious social and economic reopening of the country after closing activities in April and May due to the coronavirus pandemic. Today totals almost 800,000 cases and 81,877 deaths.

In 2019 this investment contracted by 4.9%, while it grew by 0.6% in 2018 and decreased by 1.5% in 2017.

The gross fixed investment allows having “a wide knowledge” about the behavior of the investment in the short term, according to Inegi.

It consists of the assets used in the production process for more than one year and subject to property rights.

Mexico’s gross domestic product (GDP) contracted by 0.3% in 2019 due to the drop in industrial activity, which is a substantial decrease compared to the previous year’s 2.1% growth.

In the second quarter of the year, there was a historic 18.7% year-on-year drop in GDP.

For this 2020, the pandemic has led most analysts and financial bodies to put the fall in GDP at more than 8%.

The Mexican Institute of Social Security (IMSS) reported the loss of more than 1.1 million formal jobs due to the pandemic. However, in the last two months, employment began to be generated.