Foreign investment in Mexico slumped in 2020 as the coronavirus pandemic caused a sharp contraction in money flows around the world.

The Economy Ministry (SE) reported Thursday that preliminary figures show that foreign direct investment (FDI) declined 11.7% last year compared to 2019.

It said that US $39.22 billion in FDI flowed into the country and $10.14 billion flowed out for a net result of +$29.08 billion. That’s $3.84 billion less than 2019 when the net result was +$32.92 billion.

The SE said the 11.7% decrease is “fundamentally explained by the negative effects of the Covid-19 pandemic on global investment flows.”

The ministry cited a United Nations estimate that global FDI flows fell by 42% in 2020 with respect to the previous year.

“This shows that in comparison with the rest of the world, Mexico performed better in the attraction of FDI in the most adverse year of recent economic history,” the SE said.

More than half of the FDI in Mexico last year – 55.4% – was reinvestment of profits by companies that already have a presence here. New investment only represented 22% of the figure while payment of accounts between companies contributed 22.6%.

The manufacturing sector took the lion’s share of investment, raking in 40.6% of total FDI, followed by financial and insurance services (23.2%), transportation (9.8%), retail (7.7%), mining (4.6%) and mass media (4.3%).

The United States remained the biggest source of foreign investment, with 39.1% of total FDI coming from that country. Canada ranked second with 14.5% followed by Spain (13.7%), Japan (4.2%) and Germany (3.5%). The remaining 25% came from numerous other countries, the SE said.

The ministry said that 212 foreign investment projects worth $16.25 billion were announced last year and that $5.83 billion of that amount has already flowed into the country.

The decline in FDI is 3.2 points higher than Mexico’s GDP contraction of 8.5% in 2020, the worst result since the Great Depression.

Mexico News Daily