Gross Fixed Investment (GFI) fell by 0.2% YoY in March, a smaller contraction than Bloomberg’s consensus of -0.5%. By sector, machinery and equipment decreased by 0.4%, with both imported and domestic components declining. Construction fell by 0.1% YoY, with public and non-residential components also declining. Using seasonally adjusted data, investment increased by 0.3% MoM, in line with market expectations. Machinery and equipment fell by 0.7% MoM, while construction rose by 0.8% due to residential growth, with non-residential construction acting as a drag (-0.8%) due to the completion of public infrastructure projects from the last year of AMLO’s administration.
Private consumption stood at +1.2% YoY, in line with consensus. On a monthly basis, using seasonally adjusted data, private consumption declined by 0.2%, with positive performance in imported goods by 0.4%, while domestic goods and services decreased by 0.5% each. Results were also in line with INEGI’s private consumption nowcast, which projected a contraction of 0.2% MoM in March.
Our view: March's domestic demand figures were affected by Easter holiday, mainly in private consumption, and they continued to show weak results in 1Q25, with investment down 13% QoQ/SAAR and consumption up only 0.2%. Looking ahead, economic activity could improve if uncertainties regarding trade policy moderate materially, which might support private investment and sectors that are sensitive to external demand. For 2025, we forecast a 0.5% GDP contraction. Regarding interest rates, weak activity adds to the recent Board communication favoring a 50-bps cut at Banxico’s next meeting (June 26) to 8.0%.
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