Industry Trend Analysis - Regionally Strong Infrastructure Appeal Despite Risks - MAR 2018

BMI View: Although faced with short term political risk and a relatively weak growth outlook in 2018, Mexico's infrastructure market remains one of the most attractive markets in Latin America supported by robust demand for infrastructure and its low risk operating environment.

Global and Regional Ranks

  • Regional rank (out of 16): 2
  • Global rank (out of 105): 48

Key Features and Latest Updates

  • Mexico saw a small decline in its score in our Infrastructure Risk/Reward Index this quarter, dropping from 52.3 to 52.0, but moved up one position to become the second most attractive infrastructure market in Latin America as Colombia's score fell from 53.8 to 51.6.
  • Mexico stands out in Latin America for its strong Industry Risks score, second only to Chile. In particular we highlight the country's robust bureaucratic environment, supportive labour market dynamics as well as an increasingly open competitive landscape where a number of large foreign firms are active.
  • Mexico has a large and relatively urbanised population as well as economic growth leading rising incomes, factors which make Mexico one of the most attractive countries in the region for infrastructure investment, and reflected in Mexico's strong score in the Country Risk component of our infrastructure RRI.
  • Elevated short term political risk deriving from the country's upcoming presidential election as well as the uncertainty surrounding the future of Mexico's trade relationship with the United States amidst the renegotiation of the North American Free Trade Agreement (NAFTA) remains a factor weighing on Mexico's risk outlook.
  • A lackluster construction industry growth outlook compared to other markets in the region, in part the result of the negative impact of uncertainty on private investment, remains a factor weighing on Mexico's Industry Rewards score.

Risk/Reward Snapshot
Mexico And Latin America Region Infrastructure Risk/Reward Index
Scores out of 100, Higher Score = More Attractive Market. Source: BMI Infrastructure Risk Reward Index

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