Monday, On the Margin
Financing the Mexican manufacturing industry.
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Last week’s holiday of Semana Santa paused many statistical releases on Mexican macro and financial datasets.
Aside from seeing manufacturing rise by 1.4% YoY (on a seasonally adjusted basis); and pension funds recording an 18% annual growth rate on net assets1, there is little to highlight this week with regards to data published during the holidays.
This is why this Monday we decided to write a short essay exploring the changes in financing opportunities for manufacturing companies in Mexico since the end of the pandemic.
We think the data raises some interesting questions.
In case you missed it, we published an update on the state of Mexican non-regulated SOFOMs last week.
Mexican manufacturing’s credit-to-GDP ratio stands at 10.2% — a figure in line with the non-manufacturing economy.
Between 2010 and 2019, Mexico’s manufacturing industry saw dramatic financing growth, with loan-to-GDP ratios surging from 9.0% to 12.7% over 9 years. However, this statistic has significantly contracted since the impact of the pandemic — with credit-to-GDP ratios decreasing by over 2 percentage points in the span of 4 years.
At the same time, the “credit penetration” ratio has remained flat for the rest of the economy.
What could be going on?
According to Mexico's central bank data, 4 out of 5 of the top-funded manufacturing subsectors have experienced shrinking loan-to-GDP ratios over the past 5 years.