Gap
El Financiero, May 14th, 2025
Automobile production in April saw a 9% year-over-year decline. That’s not unusual, considering Easter fell in that month. In March of last year, under the same circumstances, the contraction was 13%. Seen this way, we might think that things in the economy aren’t all that bad.
However, in that same month, truck production collapsed. The drop compared to April 2024 was 24%, and in the two prior months it had been over 26%. In fact, since October, the average monthly decline in this sector has been 15%. From this perspective, things are looking bleak.
With this data, and what I shared with you on Monday, I thought it would be useful to illustrate why the country’s economic momentum is so weak. You’ll recall I mentioned that, if nothing changes, average annual growth from 2024 to 2027 would hover around 0.4%. The cause, I believe, is investment—which has traditionally been insufficient in Mexico—but now carries a heavy burden and faces major obstacles.
First, the burden. Five years ago, right around this time, we began emerging from the pandemic lockdown, which started in mid-March and ended in mid-June. During those three months, the country's economic activity dropped significantly. Unfortunately, there was no support program here—neither for businesses nor for consumers—so the subsequent recovery was incomplete. And beyond some figures this column continues to question, since the 2024 election we’ve entered a slowdown which, since October, I believe qualifies as a recession.
During those lockdown months, and for many months afterward, you consumed less than usual. We emptied out our pantries, then started shopping cautiously, sanitizing everything we brought home or ordered online. Maybe for six or nine months, we didn’t buy clothes or shoes. The same thing happened in businesses—they stopped investing in construction, machinery, and vehicles.
It occurred to me to calculate the size of the gap. I did it simply: compare the monthly production of cars and trucks to what was being produced before the lockdown. We were producing about 330,000 cars and over 16,500 trucks per month. If we compare monthly production to that benchmark, and then add up the shortfall from 2019 to today (because remember, the investment slump didn’t begin with the lockdown but with the cancellation of the airport project), we find that we’re short nearly 3 million cars and 86,000 trucks. In other words, it’s as if ten months of production in those two industries vanished.
If I run a similar calculation for total investment in the country—both domestic and foreign—as reported in the National Accounts, I find the same thing: the gap that started with the cancellation of the NAIM and extended through the end of 2024, the most recent data available, equals eleven months of investment that simply didn’t happen. Nearly a full year.
That maintenance that wasn’t done, those vehicles that weren’t replaced, the buildings that weren’t built—all of that results in lower productive capacity. And you understand that it’s impossible to make up for a lost year in just a few months. At our best pace—in the second half of 2023 and the first half of 2024—we were making up about 12% each quarter. Using the figures I remain skeptical about, but let’s leave that aside for now. At that pace, it would take a couple of years to close the gap. But then comes the second part: the obstacles. We’ll talk about those on Friday.