Foreign investment in Mexico continues to rise, reaching a new historical high of $20.313 billion in the first quarter of the year, according to data published by the Ministry of Economy. This represents a 9% increase compared to the same period in 2023. 42% of foreign direct investment (FDI) was made in the manufacturing sector, indicating a utilization of the USMCA free trade agreement with the United States and Canada. This trend is driven by increased exports to the US amid the escalating trade war with China, leading to a global trend known as nearshoring, where companies relocate their factories to “allied” countries of the US.
The majority of the investment in Mexico was reinvestment of profits from existing companies in the country, possibly expanding their operations to reduce reliance on Chinese operations. “New investments,” made by foreign shareholders to create new companies or increase the capital of existing corporations, decreased by over $330 billion, according to the Ministry of Economy. Mexico is a significant manufacturing and assembly hub in the automotive sector, with 25% of the FDI in the first quarter going to the financial sector and 12% to mining. Mexico is the world’s leading producer of silver.
Not all states in Mexico have benefited equally from FDI, with 59% of the investment going to Mexico City and 15% to three states – Nuevo Leon, Chihuahua, and Baja California – that share a border with the United States. The majority of the capital origin is North American, with 52% coming from US companies, 8% from Canadian companies, and 9% from German companies. Growth of foreign investment signals confidence in Mexico’s economic stability and opportunities for growth and development, driving greater job creation and technological advancements in various industries.
Mexico’s strategic location as a trade gateway between the Americas positions it as an attractive destination for foreign investment, particularly for companies looking to diversify supply chains and reduce dependence on China. As a manufacturing powerhouse, the country has established itself as a key player in the global economy, attracting investors from diverse sectors such as automotive, finance, and mining. The government’s efforts to promote investment-friendly policies and maintain trade partnerships with key trading partners such as the US and Canada have contributed to the increase in FDI, driving economic growth and development across different regions in Mexico.
Overall, the rise in foreign investment reflects Mexico’s attractiveness as a business destination and its potential for economic growth and development. The country’s diverse sectors and strategic geographic location make it a favored choice for investors seeking opportunities in Latin America. With a strong focus on enhancing trade relations and fostering a conducive investment climate, Mexico is poised to continue attracting foreign capital and driving economic prosperity for years to come.
