Foreign direct investment grows: Investors trust Mexico

This week, the mexican Ministry of Economy released updated figures on the inflow of foreign direct investment in Mexico. In the period from January to December 2021, these amounted to USD 31.621 billion, an increase of 8.7 percent compared to the previous period in 2020 (USD 29.079 billion). Of this, 43.7 percent is attributable to new investments. Taken together these were activities of 3801 companies with foreign equity participation and 5435 trust agreements.

In particular, the most popular economic sectors were automotive (39.7 percent), mining (15.2 percent) and financial and insurance services (15 percent). Among these, almost half of the investments came from the United States (47.5 percent), followed by Spain with 13.7 percent, Canada with 6.5 percent and finally Germany with 5.2 percent.

Investor confidence has returned noticeably after the pandemic. The recession in global foreign direct investment is expected to be reached by the end of 2021, with increasing transaction volumes reaching pre-pandemic levels of $34.1 billion.

The OECD, the Organization for Economic Cooperation and Development, also forecasts GDP growth of 2.3 percent in 2022 and 2.6 percent in 2021. Mexico has the potential to significantly expand its economy after the pandemic, and to do so, it needs to reignite investment, increase domestic productivity and increase public investment.

Overall, Mexico has an open and safe environment for foreign direct investment and current economic measures. ThemMembership in the USMCA, the OECD, the G20 and the Pacific Alliance allow investors to ensure the security of their operations despite various external factors. With 35 bilateral agreements to promote and mutually protect investments, Mexico is a safe investment partner and ideal location for exports. In addition, Mexico has a strategic location, a large domestic market, a wide variety of natural resources, a good skilled workforce and a diversified economy. In Latin America, Mexico is the country that attracts the most foreign direct investment.

With various investment incentives, investors can easily enter the Mexican market. This includes benefits such as land grants, tax incentives, funding for technology, innovation and workforce development, and the establishment of special economic zones, free trade zones and other incentive programs.

The pandemic has particularly affected economic activities and significantly impacted foreign direct investment. After two years, things are now looking up, and confidence and investment appetite are growing. The good environment for investors and the very good integration into the world economic order speak in favor of making a move into Mexico.

Do you have further questions about current economic developments in Mexico? Do not hesitate to contact us!