FDI in Mexico hits third highest record since 1999

Mexico accounted for $2,4831.7 million in foreign direct investment inflows from January to September 2021, an annual increase of 5.7%, the Economy Ministry said.

As usual, this statistic compares raw numbers and is later adjusted as there is more information about the operations of the corresponding periods.

“The above shows a recovery in foreign direct investment flows, in line with the positive global trend, according to the latest data issued by the United Nations Conference on Trade and Development (UNCTAD),” the Ministry of Economy said in a statement.

For similar periods, this was the third highest amount looking at online registrations, since 1999, surpassing it by 2013 ($28.2 billion) and 2019 ($26.1 billion) levels.

Only taking into account the third quarter of the current year, the incoming foreign direct investment in Mexico amounted to 5,446 million dollars, of which 3,539 million dollars represented new investments; 333 million for reinvestment and 1574 million for intercompany accounts. The total figure compares to a collapse of 1.279 million in the same period in 2020, already updated.

Globally, the increase in FDI inflows in the first two quarters of 2021 restored more than 70% of the loss caused by the COVID-19 pandemic in 2020.

According to UNCTAD, these inflows in the first half of this year amounted to an estimated $852 billion, which indicates a stronger-than-expected recovery momentum.

More broadly, the Organization for Economic Co-operation and Development (OECD) released an updated forecast in September 2021, which estimated that global economic growth would slow 3.4% in 2020, but also projected that the global economy would grow at an annual rate of 5.7% in 2021 and 4.5 % in 2022, assuming continued strong support from macroeconomic and accommodative monetary policies.

In Mexico, the initial FDI recorded in January-September 2021 came from 3,259 companies with foreign capital participation, 3,721 credit contracts and 23 foreign legal entities.

By type of investment (funding source), the acquisition of foreign direct investment through dividend reinvestment was 40.3%, followed by new investments (38.4%) and inter-company accounts (21.3%).

By sector, manufacturing accounted for 45.0% coverage, before mining (14.0%); Financial and insurance services (10.9%); transport (10.0%); Trade (6.0%) and temporary housing services (4.6%). The remaining sectors accounted for 9.5 percent.

As for the country of origin, the United States reached 49.6%, followed by Spain (10.7%), Japan (6.3%), Germany (5.3%), and Canada (5.2%); Other countries contributed the remaining 22.9%.

Total investment, stagnant

Contrary to the positive performance of foreign direct investment, among the largest economies in Latin America, Mexico is, by far, the lagging behind in revitalizing private investment after the critical phase of the economic crisis due to the Covid-19 epidemic.

During the first half of the year, total fixed investment (IFB) in Mexico was 12.2% lower than what was observed during the same period in 2019, according to calculations based on figures reported by the National Institute of Geography and Statistics.

In terms of recovery, Brazil leads, with a 19% advance for FIFA compared to the first half of 2019, according to the Brazilian Institute of Geography and Statistics (IBGE).

Followed by Peru with an expansion of 15.2%, and Argentina with a growth of 11.2%; Colombia (+2%) and Chile (+0.6%).

The above, according to figures published by the Central Reserve Bank of Peru, the Statistics and Census Institute of the Argentine Republic (Indec), the Department of National Statistics of Colombia (Dane), and the Central Bank of Chile.

roberto.morales@eleconomista.mix