Construction Industry Trends Mexico - 2021

Market Monitor

  • Mexico
  • Construction

12th October 2021

Only a modest construction rebound in 2021 and in 2022

 

Mexico construction credit risk industry trends | Atradius
Mexico construction output industry trends | Atradius

The economic downturn caused by the coronavirus pandemic has further weakened a Mexican construction sector that had already been performing poorly in 2019. After a 17.7% contraction in 2020, Mexican construction output is forecast to rebound only 11% in 2021, and to grow about 3% in 2022. Residential construction demand is impacted by a high unemployment rate, leading to project delays. Recovery of industrial and commercial building remains slow following a severe 8.5% contraction in Mexico´s GDP in 2020, while civil engineering has suffered from low public investment over the past three years.

Margins of construction businesses have deteriorated over the past twelve months, due to increased prices for construction materials like aluminium, cement, copper, steel, and insulation materials. That said, Mexican banks have continued to offer loans and payment extensions to construction businesses at competitive rates, as the financial services sector remained generally resilient during the economic crisis. Mexican construction companies usually require bridge loans or replacement loans from banks.

Payments in the Mexican construction industry take about 60 days on average. The number of protracted payments has been high in 2019 and in 2020. Requests for payment extensions are common within the industry, as businesses depend on work in progress and recovery of their accounts receivables. It is quite usual for construction customers to pay slowly, in particular in the public infrastructure segment. Due to the unsubstantial recovery in short-term demand and the ongoing elevated level of payment delays our sector assessment is “Poor”, and our underwriting stance remains rather restrictive across all subsectors.

Related documents

Disclaimer

Each publication available on or from our websites, such as, but not limited to webpages, reports, articles, publications, tips and helpful content, trading briefs, infographics, videos (each a “Publication”) is provided for information purposes only and is not intended as a recommen¬dation or advice as to particular transactions, investments or strategies in any way to any reader. Readers must make their own independent decisions, commercial or otherwise, regarding the information provided. While we have made every attempt to ensure that the information contained in any Publication has been obtained from reliable sources, Atradius is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information in any Publication is provided ’as is’, with no guarantee of completeness, accuracy, timeliness or of the results obtained from its use, and without warranty of any kind, express or implied. In no event will Atradius, its related partnerships or corporations, or the partners, agents or employees thereof, be liable to you or anyone else for any decision made or action taken in reliance on the information in any Publication, or for any loss of opportunity, loss of profit, loss of production, loss of business or indirect losses, special or similar damages of any kind, even if advised of the possibility of such losses or damages.