The Mexican Chamber of the Construction Industry (CMIC) will deliver to the virtual president-elect Claudia Sheinbaum Pardo a package of almost 200 infrastructure projects to boost the economy, although the private sector organization acknowledged that the works are at risk in the event of an economic recession in the United States or a further strengthening of the dollar.
“We support the infrastructure plan announced by our president-elect, Dr. Claudia Sheinbaum, and we share her vision of promoting a new stage of shared prosperity,” said Luis Méndez Jaled, president of the private initiative organization, at a press conference.
He noted that the CMIC supports the development of the Isthmus of Tehuantepec Corridor and the regional development hubs, as they will receive a major boost during the next federal administration and will mark a before and after for the south-southeast of our country. However, he commented that more infrastructure is needed to promote relocation.
“Infrastructure is development, infrastructure is well-being. In this context, the CMIC values the impetus represented by large infrastructure projects, and we especially recognize the sense of social justice represented by the projects carried out in the south-southeast of the country,” he said, before pointing out that the construction sector is concerned that public investment in infrastructure has been declining structurally for several six-year terms.
“Investment levels in logistics and transportation infrastructure are far below Mexico’s needs,” he said.
He stressed that the CMIC has integrated concrete proposals into a bank of strategic projects for logistics and transport infrastructure, which will be delivered to Jesús Esteva Medina, the next head of the Secretariat of Infrastructure, Communications and Transport (SICT).
He noted that the current infrastructure represents a platform for the country’s economic development, but faces challenges in the road and rail sectors, as well as regional inequalities and deterioration.
He stressed that in light of the needs in roads and transportation, the country is ranked from 50th to 66th in the logistics performance index among 139 countries evaluated. “The shortcomings in infrastructure are reflected in higher logistics costs,” he said before commenting that the additional cost due to logistics and transportation deficiencies is equivalent each year to the total value of the production of the states of Sinaloa, Durango and Nayarit together, that is, 4 percent of the gross domestic product (GDP).
“The costs of delays in freight transport on the 15 main highways alone amounted to 169 billion pesos in 2023,” he said.
Risks
Following the episode of volatility experienced on Monday in international markets due to fears of a recession in the United States, Méndez Khaled commented that a situation of this type, as well as a strengthening of the dollar against the peso, could affect the construction sector.
Luis Armando Díaz Infante, national secretary of CMIC, commented that if the rating agencies see an economic risk, promoting public-private projects, as proposed by the organization, will have a higher cost or may lose appeal.
“If rates go up or if we have an exchange rate that varies, it clearly has an impact. Investors look for an internal rate of return and if there are economic effects that directly alter the terms of the equation, this internal rate of return affects the viability of the project,” he said.
Méndez Jaled pointed out that the CMIC will propose that public investment be gradually increased until it reaches 5 or 6 percent of GDP; that the profitability of public investments and the quality of infrastructure be improved; that an institute or collegiate body responsible for planning with a long-term vision be created; that transparent mechanisms for public-private co-investment in logistics and transportation infrastructure be promoted; among others.
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– 2024-08-07 09:09:21
