Mexico’s finance chief prepares infrastructure plan to revive economy

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(Bloomberg) – Mexico is preparing a multibillion-dollar infrastructure package with private companies and is stepping up efforts to attract American investment that would otherwise go to China as it seeks to revive a stagnant economy.

The public-private investment program will include more than 40 projects in areas such as highways, energy companies, telecommunications and ports, Finance Minister Rogelio Ramirez de la O said in an interview at the National Palace in Mexico City. . The official announcement will come soon, he said, declining to provide details until the package is unveiled.

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“We already have it,” Ramirez de la O said Thursday, adding that the initiative had been endorsed by private sector representatives. “There will be an announcement of an infrastructure package in a few weeks, when the president is ready.”

While President Andres Manuel Lopez Obrador has made similar multibillion-dollar public-private announcements in the past, this new program comes as Mexico has recorded two consecutive quarters of contraction in activity, placing the second-largest economy in the world. America in the position of having to jump-start growth.

Read more: Mexico follows Brazil into recession with quarterly drop

Mexico under Lopez Obrador is already spending on major infrastructure projects, including the construction of the Maya train in the southeast of the country and the Dos Bocas refinery, intended to reduce Mexico’s dependence on imported fuels.

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Private investment has plummeted during the pandemic and although it has picked up in the construction sector, the government is looking to bolster it in other areas, Ramirez de la O said.

“For the first time in many years, public investment is above 3% of GDP,” he said.

Proximity presentation

The minister also addresses more investors in the United States, presenting the benefits of placing resources in Mexico rather than China. Moving operations from Asia closer to home is beneficial in times of widespread supply shortages and rising shipping and labor costs, he said.

“We want to coordinate more with the United States, with business groups and the government,” Ramirez de la O said. benefits that made a lot of manufacturing move to China are no longer the same. Wages are higher and shipping costs are quadruple what they were.

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As companies moved some of their production to border towns close to the United States and export demand worked in favor of Mexico, growth was slower than in other Latin American countries. . A law banning outsourcing that went into effect last year has hit the service sector and a global shortage of semiconductors has hurt the operations of Mexico’s mighty auto industry.

Read more: Mexicans abroad sent a record $52 billion home last year

Mexico is suffering from stalled investment amid the pandemic and nationalist rhetoric from Lopez Obrador’s administration. Gross fixed investment, which includes spending on factories and machinery, fell 0.1% in November from the previous month, the country’s statistical institute said on Friday.

The index, a leading indicator of long-term growth, is nearly 17% below its peak, according to economist Gabriela Siller of Banco BASE.

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