Mexico Construction Association sees 5.5% sector growth in 2006

Mexico Construction Association sees 5.5% sector growth in 2006
Published: 08 June 2006

Construction activity in Mexico will likely expand at least 5.5% this year, boosted by continued demand for home construction and infrastructure, an official from the country’s construction chamber said Wednesday.

Jorge Diez de Bonilla, vice president of housing at the chamber, told Dow Jones Newswires that the sector’s growth will likely slow from the torrid pace at the beginning of the year, when the reconstruction effort from last year’s hurricanes was in full steam.

But he predicts that construction activity can maintain a 5% growth rate during the second half of the year, despite the prospect that government spending on infrastructure could fall off after the July presidential elections.

"Traditionally the change of administrations translates into instability and a decline in production," said Diez de Bonilla following an event organized by the concrete industry. "But the chamber has made very important agreements with the federal government to protect funds destined for infrastructure works so that there won’t be a risk of works getting suspended if there are political problems."

President Vicente Fox has made both infrastructure and home building major priorities of his administration, helping to spur a construction boom to try to close the country’s housing deficit. Diez de Bonilla said he expects the next administration to continue that support.

"We have confidence in the institutions and the compacts that have been made with the federal government," he added.

Construction activity jumped 8.3% during the first quarter, contributing to a 5.5% expansion in gross domestic product that was the fastest quarterly growth rate of the Fox administration.

Meanwhile, Armando Millan, head of Mexico’s association for the ready mix concrete industry, predicted that production in that sector would exceed the 5% growth rate of the past five years.

Millan said at the event that concrete is becoming a more popular material for construction in Mexico, accounting for about 17% of overall cement consumption last year, versus 15% in recent years.

Mexico’s National Cement Chamber recently estimated that cement consumption would expand around 4.5% this year, in line with the 4.6% growth rate of 2005.