Foreign direct investment in Mexico plummets 26%

18/05/2020

In the first quarter of the year, foreign direct investment in Mexico plummeted 26.3% to 10,334 million, the contraction is added to the fall of 27.2% that was recorded in the fourth quarter of 2019, according to data from Banxico.

Foreign direct investment in Mexico plunges 26%
Foreign direct investment in Mexico plunges 26%

One of the main catalysts for the development of countries is Foreign Direct Investment (FDI) and in the first quarter of 2020 reached $10.334 billion dollars to Mexico, which represented a contraction of 3.685 or 26.3% over the same period in 2019.

This is the third fall in the first five quarters of the current government and in the future could be maintained downwards by the policy of the government of Andres Manuel Lopez Obrador (AMLO).

Data from the Bank of Mexico (Banxico) again differ from the information released by the Secretariat of Economy (SE) headed by Graciela Marquez, who on Friday announced a 1.7% increase in FDI in the first quarter.

While in all, the SE has reported an increase, the central bank has deferred. only for 2019, reported that FDI grew 4.2% and the central bank that keeps the accounting of international accounts reported a fall of 3.2%.

The new contraction of FDI in Mexico occurs at the beginning of the largest economic recession in the world by the coronavirus pandemic and where in addition, the government of Mexico continues to limit the participation of foreign investors.

The most recent chapter prompted the Canadian Embassy and the representative of Austria, Belgium, Bulgaria, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, the Netherlands, Poland, Portugal, Romania, Slovak Republic, Spain and Sweden to express their concern to the Mexican government through two letters sent to the head of the Energy Secretariat, Rocio Nahle, with regulatory changes affecting foreign investors in the renewable energy sector in Mexico.

Foreign Direct Investment grew 4.2% in 2019

The Secretariat of Economy (SE) announced that, with preliminary figures, from January to December 2019 were captured 32,921 million dollars of Foreign Direct Investment (FDI), in other words, 4.2 percent more than the captured in the same period in 2018, which was 31,604 million dollars.

"If we compare the total FDI captured in 2019, with the preliminary figures reported for the same period in 2018 which was $31.604 billion dollars, we see an increase of 4.2 percent. The increase was concentrated in the areas of reinvestment and new investment, although the subsequent adjustment of the figures could change this result," it said.

In a statement, the agency explained that the foreign investment figures will be adjusted when there is more information on the operations of the period. It said that the result of 2019 is derived net by company or trust from the difference of $41,900 billion dollars recorded as inflows and by $8,979 billion in outflows.

The methodology to determine FDI is based on international standards contained in the balance of payments manual of the International Monetary Fund (IMF) and the framework definition of foreign direct investment of the Organization for Economic Cooperation and Development (OECD).