This drop in investment is not new. From July 2024 until the latest available data on gross fixed investment that we have, that corresponding to September, investment fell by 10.62%. Of this total investment, the only one that has recorded some growth – certainly nothing extraordinary, even if historic levels are loudly claimed – is foreign direct investment. Attendance fell this year by almost 30%. The decline in private investment was smaller, even if its participation in total investment is significantly higher.
Some allude to the drop in viewership in the atypical 2024. A year that was dedicated – others would say invested – to finishing the emblematic projects of the last administration that the president at the time wanted to inaugurate at all costs. If these projects are already completed, then the logic is that public investment will decrease, right? Another argument is that the first year of any administration is slow and new teams must learn to plan and execute. In my opinion, both arguments in this case are false. If Mexico had already achieved desirable levels and percentages of investment – public in this case – we could make this argument. But that doesn’t work. Beyond a train, an airport and a refinery, Mexico must identify critical infrastructure projects to be able to take advantage, if they are to be realized, of the unique opportunity offered by strengthening long-term relations with the largest market in the world. The second argument doesn’t hold up either. It is enough to recall that the previous president inherited from the current president his first Secretary of the Treasury, precisely for this, to – in theory – maintain continuity in the exercise of expenditure.
The private sector, for its part, alludes to the contraction of investments in two variables that are constantly talked about: the reform of the judiciary and the uncertainty arising from the tariff policy of the United States. For private investors, these two variables are exogenous variables which have led to an increase in the risk premium. The consequence is visible to all. A plummeting investment and a stagnant country.
Public and private investment fell. The first clearly results from a policy of controlling expenditure while the second reflects a position of waiting in the face of an uncertain and volatile environment caused by the external and internal causes already mentioned.
What is a fact – and this is not a case of seeing the glass half full – is that these two effects will attenuate over time, as is the case with any economic shock. Ultimately, investors will learn to deal with a different legal system and do what is necessary to avoid an escalation of disputes. Ultimately, the commercial dynamic will take a certain direction. It will probably be different from what has been done so far, the rules will be stricter, the issues will be mixed – trade with security, security with migration – but an agreement will be reached in which the two economies will continue their integration as happened precisely this year when, despite all the threats and all the customs tariffs, Mexico is not only the main trading partner of the United States, but it is also the first destination for American goods and services.
When the effects of the two shocks will subside – in one, two, three more years? – one would expect investments to start to wake up. It may be too late for an economy that needs investment to grow, and it needs it urgently, but the unfortunate thing about this argument is that it would be a passive situation. A situation in which it would be enough to wait for the harmful effects of the two shocks to dissipate for investment to return to a more robust growth path.
But the relevant question is whether this is what we want. Are these good wishes for the country? Can time pass and things adapt to a new reality?
What to do then?
The response should not be resignation or passive waiting for the external environment to become favorable. Even less is the idea that time is enough to dilute the shocks for investment, almost by inertia, to resume its course. If private investment declines, public investment will have to play a countercyclical role. Today he doesn’t do it.
But the problem is not exclusively federal. States invest little. According to the alert system of the Ministry of Finance, all states are on the green light, which means that they have debt capacity. Debt may have become stigmatized, but if used well, it is a powerful tool for driving infrastructure projects. Subnational public investment has eroded quietly, as if it didn’t matter. And that’s important. Without local infrastructure – water, energy, roads, logistics – there are no productive projects to implement or sustainable growth.
If states do not have the capacity to structure and execute projects, the federal government has the instruments to remedy this. Banobras and Fonadin exist precisely for this: to support, structure and accelerate investment projects. Not to replace local governments, but to make viable what is currently stopped due to administrative incapacity. Giving them “turbo” is not a political concession; It is an economic necessity.
The president has clear and legitimate leverage here: to apply pressure to implement what already exists. It is not a question of announcing new emblematic projects or promising major projects six years away that could one day come to fruition. It’s about unlocking, accelerating and executing. The main government agencies in infrastructure, SICT, Pemex, CFE, Conagua, among others, have ready projects that are not moving forward or are dragging on postponed investments.
Investment can no longer be treated as a residue of fiscal adjustment or left at the mercy of shocks over which it has no control. Even less so in an economy with potential, close to the largest market in the world and with obvious infrastructure needs. Betting in time to make everything right is not a strategy: it is an act of faith. And governing, especially when growth is urgent, requires more than good wishes.
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