Mexico gross fixed investment suffers biggest annual drop since 2009

MEXICO CITY (Reuters) - Mexican gross fixed investment in July registered its sharpest annual fall in almost a decade, underlining the fragile state of business confidence under President Andres Manuel Lopez Obrador, official data showed on Monday.

FILE PHOTO: Mexico's President Andres Manuel Lopez Obrador speaks during a news conference at the National Palace in Mexico City, Mexico August 30, 2019. REUTERS/Henry Romero/File Photo

Data from the national statistics agency showed that when adjusted for seasonal swings, the gauge of spending on machinery, equipment and new construction in Latin America’s second-largest economy tumbled by 9.1% compared to July 2018.

The annual decline was the biggest since November 2009.

Gross fixed investment has fallen in annual terms in all but one of the eight months for which data has been reported since Lopez Obrador took office in December last year.

Investor confidence has been unsettled by a number of decisions made by Lopez Obrador, notably his cancellation of a partly-built, $13 billion Mexico City airport, a project he said was tainted by corruption and geologically unsound.

The veteran leftist has also cast doubt on other projects agreed under the previous government, including several natural gas pipeline contracts that he argued were unfair to Mexico.

That led to a renegotiation of the payment structure for the gas pipeline contracts which the government said would ultimately save Mexico $4.5 billion.

Lopez Obrador assumed power promising to rev up economic growth to an average of 4% per annum during his six-year term. But the economy has struggled to gain traction and narrowly avoided slipping into a recession in the first half of 2019.

Compared with the previous month, gross fixed investment fell in July by 0.7% in adjusted terms, the third consecutive monthly decrease, the statistics agency’s data showed.

In unadjusted terms, Mexican gross fixed investment was 7.6% lower than in July 2018, the agency said.

Reporting by Dave Graham; Editing by Nick Zieminski