Mexico continues to attract foreign investments at record levels, according to the latest data published by the Ministry of Economywhich show that in the first half of 2024, Foreign Direct Investment (FDI) reached 31 billion 96 million dollars, marking a new historical high for this period since records began.
This figure represents an increase of 7 percent. compared to the same period of the previous year, when 29 thousand 41 million dollars were raised. A remarkable aspect of this investment flow is the predominant role played by the reinvestment of profits.
Reinvestment of profits reached 30,288 million dollars, a significant increase compared to the 22,609 million recorded in the first half of 2023. The government agency interprets this trend as a clear sign that the foreign companies Not only do they maintain their operations in the country, but they are also committed to expanding them.
“For the second consecutive year, we highlight the unprecedented amount of the reinvestment of profits carried out by companies in the country, due to the economic stabilitythe good one business environment and the competitive advantages that are offered, ideal situation for Expand and improve its production processesbecoming tractor companies of new investments“, the Ministry of Economy indicated in its report.
In contrast, the new investments showed a slight contractiongoing from two thousand 135 million dollars in the first half of 2023 to 909 million in the same period of 2024. Meanwhile, the accounts between companies They recorded a negative balance of 101 million dollars, compared to the positive balance of 4,297 million dollars of the previous year.
As for the origin of the investmentsThe United States remains the main investment partner, contributing 44 percent of the total, with 13,717 million dollars. It is followed by Germanywith four thousand 167 million (13 percent); and Japanwith 3,082 million (10 percent). The rise of countries such as Belgium and South Korea in it ranking of investors, reflecting a diversification in the sources of foreign capital; However, China remains absent from the statistics amid the phenomenon of nearshoring.
At the sectoral level, Manufacturing remains the main recipient of FDIaccounting for 54 percent of the total. Within this sector, the following stand out: the transportation equipment, beverage and tobacco industriesand chemicals. The financial sector is in second place, attracting 15 percent of investments.
Caution is suggested
Jorge Molina, Public policy and international trade consultantstressed that when comparing the figures for the second quarter with those for the first, a significant drop can be seen.
“The FDI in the second quarter was 10.783 billion dollars, compared to 20.313 billion in the first quarter. The fall can be explained by the uncertainty generated by the elections June,” Molina said.
The consultant also stressed that reinvestment of profits represented 97.4 percent of the total, a historically atypical percentage.
“The amount reported by reinvestment of profits does not guarantee the creation of new jobs wave construction of new plants“, Molina warned. He also said that the new investments have decreased dramatically, which “must sounding the alarm about Mexico’s perception abroad as destiny of new investments”.
More FDI anticipated
For its part, Kenneth Smith, partner at Agon and former chief negotiator for the USMCAalso attributed the decline in new investments to the election year, because the investors They are waiting to see what happens in the US.
However, Smith saw optimism in reinvestment of profitspointing out that companies that are already here continue to bet on Mexico in the long term, accepting a “cautious optimism” towards the Claudia Sheinbaum’s next government.
“Two years ago I said that our FDI should exceed 60-70 billion, and some were surprised. But this year we are heading towards that figure; however, we have to create the conditions at the national level for attract investmentat least 20-25 percent can be in new investments“, the expert said.
For its part, Adrian Gonzalez, President of Global Alliance and US Customs Agent, highlighted the role of EU, Germany and Japan in the FDIlinking it to the boost that the phenomenon of nearshoring and the friendshoring.
Gonzalez also highlighted the Ternium investment announcementwhich is considered a response to the new requirements for greater regional production in the steel industry.
However, the expert warned that the investment potential could be even bigger. “While the investment is on the rise, because it could be better if we had a better environment, if we had a Easier to do business in Mexico“, said.
