With an eye toward the future, Mexico is investing heavily in infrastructure. Several projects have already begun, and new ones are being announced regularly – both from the public and private sector.
As the country seeks to overcome the setbacks of 2020, key areas of improvement have been identified. And both the federal government and private companies are stepping up to aggressively position the Latin American country for a strong economic recovery.
In 2019, Mexican President Andrés Manuel López Obrador announced a round of economic investments related to infrastructure for the next four years. However, the investment project was placed on an abrupt hold in 2020 due to the global crisis.
But on October 5, 2020, President López Obrador announced a reboot. In partnership with the private sector, Mexico is investing approximately 300 billion pesos in approximately 39 infrastructure projects. These projects will significantly improve several sectors important to the Mexican economy, including:
According to a statement by Jorge Nuño, spokesman of the Unit of Investments of the Ministry of Finance, this investment plan will represent 1% of Mexico’s GDP and create approximately 185,000 new jobs for Mexican workers.
He went on to stress the importance of Mexican cooperation in the USMCA and the opportunity to leverage Mexico’s competitive advantages for continuous growth. Mexico has consistently emphasized supply chain health, state-of-the-art industrial facilities, and strong transportation and energy infrastructure to grow their economy. This has made Mexico the manufacturing partner of choice for many international producers, even beating out China in many cases.
By the end of 2020, many of the announced projects were already underway. And in November of that year, Mexico announced a second set of infrastructure investments. Nine of these focus on electricity sector improvements. This brings the public sector commitment to $25 billion USD, and the drive is on for an additional $100 billion USD in private investment.
Several projects Mexico is targeting represent at least – and in some cases, well over – $1 billion USD. These are some of the strategic areas of improvement Mexico is investing in to boost their economy long term.
Because tourism is so important to the Mexican economy, the top priority will be the already-under-construction rail line connecting Tabasco, Chiapas, Campeche, Yucatán and Quintana Roo. The railway will be used for both passenger service and freight.
The project is estimated to come with a price tag around $8 billion USD and stretch 1,500 kilometers.
The 58-kilometer railway line connecting Mexico City to Toluca is also a key priority. This line represents approximately 90 billion pesos of investment, and is expected to be completed by 2023.
This international airport will be entirely built and managed by the federal government and military personnel. All 74 billion pesos will come from the public sector. However, this highly important airport will create several highway projects to be funded with cooperation from private investors.
This private-sector initiative is being spearheaded by National Standard Finance and Caxxor Group. It is expected to cost upwards of $3.3 billion USD, and will involve several large construction projects.
The largest of this series of projects will be a sea port that transports freight via rail through Mexico, the US, and into Canada. This includes plans to modernize and improve approximately 167 kilometers of existing rail and build approximately 180 kilometers of new rail.
This interoceanic corridor will rehabilitate approximately 213 kilometers of rail line connecting the Salina Cruz port to the Coatzacoalcos port. With about $5 billion USD allotted to the project, most of this budget will go to modernizing and expanding the ports for improved handling of cargo.
The aim is to connect Mexico’s gulf coast to the Pacific at the country’s narrowest point. It will also include highway projects, a new gas pipeline, and 10 new development poles to attract new investment in a number of industries.
This ambitious project is entirely funded by the private sector – in particular, Mexico’s biggest mining company, Grupo México. The company announced in May, 2021, they are investing $3.1 billion USD into Mexico’s Baja California region to build new major transmission lines and expand mining capacity in a highly productive economic region.
The project is expected to greatly reduce the cost of energy throughout the state and lead to more efficient manufacturing and industrial operations in addition to benefiting other commercial and domestic customers. The Baja region is home to numerous industries and stands to become an even more attractive home for the industry with lower energy costs.
The company’s new El Arco mine, slated to open in 2027, will greatly benefit from this infrastructure upgrade. The mine is expected to produce approximately 190,000 tons of copper per year.
With Mexico investing so much in infrastructure improvements over the next few years, the country will likely enjoy continued economic recovery and sustained growth. Already a hot spot for foreign investors like China, the US, and Germany, Mexico’s foreign direct investment is expected to continue strong, pouring into this industrial powerhouse for years to come.
