Decline in FDI was particularly evident in the automotive sector. Decline in FDI was particularly evident in the automotive sector.

Foreign investment dropped 19% last year

FDI was US $27 billion but Mexico ranked No. 2 in Latin America, behind Brazil

Foreign direct investment (FDI) in Mexico fell by 19% in 2016, according to the United Nations World Investment Report 2017, which was released yesterday.

US $27 billion was invested in the country in 2016, down $6 billion on 2015 numbers. It resulted in a drop from 13th to 16th place in country rankings for FDI inflows.

The report mainly attributes the reduction to a decline in investment in the services sector and to a lesser extent manufacturing.

Automotive manufacturing was noted as being particularly affected.

However, Mexico was in second place for FDI in Latin America, only behind Brazil, which registered a decrease of 9% to $59 billion in 2016.

Better news for Mexico was that the report ranked it seventh among the top prospective host economies for 2017-19.

Chile, Bolivia and Peru also experienced downturns, contributing to an overall FDI decrease of 14% in Latin America and the Caribbean.

While the Organization for Economic Cooperation and Development (OECD) has downgraded its growth forecasts for Mexico from 2.3 to 1.9% for 2017 and from 2.4 to 2% for 2018, the long-term prospects are brighter.

Álvaro Pereira, an economics department director at the OECD, indicated that the only country in the world that could match Mexico for recent economic reforms was Portugal and that greater growth can be expected but will take time.

He added that there had been economic uncertainty in recent months and that reforms had added resilience to the Mexican economy and without them “the economy would be worse.”

Source: Milenio (sp)

Reader forum