Monday, On the Margin
FDI; airlines; commercial banks; construction; Banxico; trade; employment and Mexican Equities.
FDI
Foreign direct investment continued to grow in 2024, albeit at a slower pace. Last year, Mexico received $36.8 billion USD, representing an annual increase of 1.1% in investment inflows.
When broken down by component, parent company accounts showed the highest annual growth rate at 8.3%, followed by profit reinvestments at 7.8%. In contrast, new investments fell by 40% in 2024, marking the second consecutive year of double-digit contraction.
In a recent article, we analyzed the risks associated with these changes to the Mexican FDI.
Airlines
Regular passenger traffic rose by 5.5% year-over-year (YoY) in January 2025, with domestic and international flights growing at a similar rate.
Viva Aerobus led the sky in domestic travel, increasing its passenger count by nearly 7% and capturing 38% of the market. It also saw a 32% rise in international passengers, and now holds 5% of the country’s international passengers.
Volaris and Aeroméxico, on the other hand, posted mid-single digit growth rates during the month.
Banks
Preliminary data from Banxico points to a 13% year over year (YoY) increase for banking loan portfolios, taking balances to more than $7.6 trillion pesos at the end of January.
Consumer loans grew 18.3% YoY, rise which was mainly driven by Inbursa’s acquisition of Cetelem (one of the largest auto financing companies in the country). Excluding auto loans, consumer portfolios rose by 12.8% YoY, with strong performance across key segments:
Personal loans: +14.3% YoY.
Credit cards: +13.7% YoY.
Payroll loans: +9.4% YoY.
Construction
The construction industry suffered strong contractions during 2024.
Overall production value for construction companies dropped by 18% year-over-year (YoY) during December1, marking the eighth consecutive month of annual declines for the industry, according to INEGI.
Full year figures point to a 4.6% decline for the whole industry driven by a strong contraction in construction projects from the public sector, offset slightly by a growth rate of 7% for the private sector.
Commercial, service and industrial construction projects rose by more than 16.5% YoY as a sign of investments in the country’s nearshoring expectations — whereas housing construction delivered a stagnant 1.3% growth rate for the full year.
Construction costs
Construction companies also continue to suffer from high-single digit annual cost increases; especially in labor related fees and the leasing of machinery and equipment.
Banxico
On February 6th, the Bank of Mexico’s (Banxico) Board of Governors voted to lower the benchmark interest rate by 50 basis points, bringing it to 9.5%. The less restrictive stance in monetary policy is evident with this larger rate cut, following a series of five consecutive 25-basis-point reductions since March 2024.
In the memorandum released on Thursday 20th, the following key points were highlighted:
Potential for Further Rate Cuts: If inflation trends remain favorable, the central bank may consider additional similar cuts to the benchmark rate.
Economic Growth Projections: Governors anticipate that in 2025, the Mexican economy will maintain low growth, primarily due to uncertainty associated with potential trade and migration disruptions stemming from U.S. economic policies.
Trade
Mexico’s trade balance began 2025 with a deficit of $423 million dollars, according to seasonally adjusted figures published by INEGI. This deficit resulted from exports valued at $51.8 billion in January, which were surpassed by imports totaling $52.3 billion.
Both exports and imports increased in January, but imports saw the larger increase, with a 6.5% YoY, while exports grew by 5.9%.
Notably, the sale of manufactured goods—which account for nine out of every ten export dollars—increased by 8.6% YoY in January. Meanwhile, the purchase of intermediate goods for production rose by 11% YoY and accounted for 77% of total imports.
The dramatic 45% year-over-year decline in oil exports during the first month of this year is notable, occurring amid quality issues with the crude and a decline in production levels. Oil constitutes 2% of total exports.
Employment
Employment growth continued at a slow pace at the start of 2025. In January, the employed population was 59.4 million people, showing an increase of just 0.9% YoY, similar to the growth recorded in January 2024 and equivalent to about 533,000 jobs added.
This trend contrasts with the annual creation of more than 2.8 million jobs in the first month of both 2023 and 2022.
According to INEGI, the informality rate in January was 54.2%, rising by 5.3 basis points year-over-year.
Recap
Last week we saw the final 4th quarter reports from companies listed in the Mexican Stock Exchange.
We are attaching the following Excel spreadsheet with revenue, EBITDA and net income figures for all listed companies exclusively for Margin subscribers.