Saturday, July 13, 2024

Economy Ministry: Planned investments of US $48B in Mexico this year

There have been 117 investments announced in Mexico by private companies so far this year, worth a total of US $48 billion, the Economy Ministry (SE) said.

Around US $30 billion of this will be invested throughout 2023, and the rest will be injected into Mexico’s economy over the next three years. 

An Audi employee at work at a manufacturing plant in San José Chiapa, Puebla.
Mexico has benefited from investment fueled by “nearshoring” especially in automobile manufacturing, such as this Audi facility in Puebla. (Carlos Aranda/Unsplash)

Nearly US $30 billion will go to the manufacturing industry, US $15 billion to transport, US $2 billion to commerce and US $433 million to mining.

“This demonstrates Mexico’s competitive advantages: stability in its public finances and strength in its currency; social and political stability: a robust air, rail, sea and land infrastructure that connects us with the whole world; a young and skilled workforce; significant tax incentives; and the development of micro, small and medium-sized enterprises,” the SE said on Twitter.

By nationality, the United States leads the way in foreign investments in Mexico, accounting for more than US $30 billion of the total. Other countries in line behind the U.S. include, in order of rank, measured in U.S. dollars: 

  • China, with US $3.7 billion
  • Argentina, with US $3.6 billion
  • Germany, with US $2.5 billion
  • Taiwan, with US $2 billion
  • Netherlands, with US $1.6 billion
  • Canada, with US $875 million
  • Belgium, with US $800 million
Finance ministers at the USMCA
The USMCA trade agreement has helped Mexico to attract significant investment in 2023. Here, finance ministers from the three countries meet, with Mexican Economy Minister Raquel Buenrostro on the left. (Twitter)

Mexico attracted US $18.6 billion of foreign direct investment (FDI) in the first quarter of 2023, a 4.1% drop from the same period of 2022. However, the SE noted that the figure for 2022 was unusually high due to the Televisa-Univisión merger and the restructuring of Aeroméxico.

Excluding these two transactions, FDI in the first quarter of 2022 would be nearly 50% lower.

“The behavior observed in the first quarter of 2023 represents the confidence of investors to maintain and expand their investments in the country,” the SE said this week.

The main driver for this strong performance is likely to be companies’ “nearshoring” operations from Asia to the Americas — a trend that has been boosted by the U.S.-Mexico-Canada Agreement (USMCA). 

The trilateral free-trade agreement has particularly benefited Mexico’s automotive industry, which registered record FDI in the first quarter of 2023.

With reports from El Economista and Forbes

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