In the first six months of 2024, foreign direct investment (FDI) exceeded US $31 billion, a new record for Mexico. The total represents a 7% increase over the same period in 2023, according to the federal Economy Ministry (SE).
The SE said in a report released Sunday that nearly US $30.3 billion represented reinvestment of earnings while new investments totaled $909 million. Companies also announced more than $45 billion in planned investment during the same six-month period.
A low level of new investment usually suggests that companies are not fully taking advantage of the relocation phenomenon, according to the economic research department of BBVA Mexico. However, the fact that companies already invested in Mexico continue to do so indicates their satisfaction with previous investments.
So although new investment was down US $1.2 billion year-on-year from 2023, reinvestment was up nearly US $7.7 billion. In addition, the latest figures indicate 97.4% of foreign investment profits earned from January-June 2024 remained in Mexico instead of returning to the country of origin.
Meanwhile, loans, charges and payments between Mexican companies and their international partners reflected a US $101 million loss, compared to the first half of 2023 when Mexican subsidiaries received US $4.3 billion from their international partners.
Economy Secretary Raquel Buenrostro said the United States continues to be Mexico’s principal investment partner as U.S. companies were responsible for 44%, or US $13.7 billion, of the FDI. Germany (nearly US $4.2 billion) and Japan (US $3.1 billion) were second and third, respectively.
The beneficiaries were 2,787 sociedades mexicanas (Mexican corporations), 1,977 investment funds and 28 multi-nationals. The manufacturing sector attracted 54% of the FDI with transportation, beverage and tobacco, chemical, and tech companies leading the way.
The new record for half-year FDI was boosted by a strong second quarter after Q1 FDI had fallen by 13.6% as compared to Q1 2023. Companies in Mexico City were the prime recipients of FDI during Q2 2024, accounting for 46% of the total.
“The behavior of FDI during the second quarter of 2024 suggests sufficient liquidity to cover debts acquired in previous years and to allow for loans within corporate groups,” the SE report explained.
The SE also highlighted that for a second consecutive year, the high percentage of reinvestment clearly demonstrates Mexico’s economic stability and positive business environment as well as the country’s competitive advantages.
With reports from El Economista and La Jornada
Source: Mexico News Daily
