The Mexican economy will have a new boost from its northern neighbor, thanks to the new infrastructure plan approved by the United States Senate.

The amount approved for 1.2 trillion dollars will have economic effects that permeate towards Mexico, particularly in the construction and export manufacturing industries.

The initial approval of the plan - which has yet to go through the US Lower House - comes at a time when Mexican industry is slowing down according to the Monthly Industrial Activity Indicator (IMAI) as of June, so these new investments will bring a new momentum.

The shares of several leading companies in the construction industry rebounded in the stock markets, given a positive future outlook after the announcement of the investment plan.

Just immediately after the approval of the plan, American firms such as Caterpillar, Quanta Services and General Electric, registered increases in the New York Stock Exchange (NYSE) by 2.48%, 2.35% and 2.29%, respectively.

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In Mexico, the infrastructure company Orbia was the most benefited by receiving a 3.02% boost, followed by the cement companies Cementos Chihuahua and Elementia with increases of 1.33% and 1.23%. These types of companies will see their growth period extended due to greater purchases of cement at the high prices that exist today.

The infrastructure plan contemplates 550 billion dollars of new investments over five years for roads, bridges, internet, water pipes and other public works.

Of this, 120 billion dollars will be destined to the renovation of public transport, railways and the construction of a network of charging stations for electric vehicles; another 110 billion dollars will be to build 278,416 kilometers of highways and the renovation of 45,000 bridges in poor condition.

Quanta, GE and Orbia are particularly interested in projects for Internet access in remote areas and modernization of the electricity grid that will have an investment of 65 billion dollars each, as well as in the drinking water infrastructure to which 55 billion dollars were allocated.

The new package will also give a hand to Mexico's export manufacturing industry, which has performed favorably thanks to US demand.

The Nuevo León Chamber of Industry (Caintra NL) said that the new US investments will strengthen international value chains, mainly in the manufacture of materials, businesses that are concentrated in the north of the country.

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The issue is so relevant to the Mexican economy that even Foreign Minister Marcelo Ebrard and the Secretary of Economy Tatiana Clouthier, will travel on September 9 to a High Level Economic Dialogue with Vice President Kamala Harris, in which one of the points to deal will be the relocation of supply chains.

Since months ago, the real estate sector for industrial spaces was already in a streak of high demand due to the fact that several international companies were seeking their ability to relocate or offshoring, with the aim of taking advantage of the benefits of the Mexican workforce and high American demand.

According to the real estate consultancy Solili, at the end of the second quarter of 2021 the increase in the demand for industrial space was 35%, more than double the 15% that was estimated.

The city that stood out the most was Monterrey, and in addition to the capital of the country, there are three other cities in the north: Tijuana, Saltillo and Ciudad Juárez.

Consult Solili for the National Industrial Real Estate Report as of July 2021

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