The benefits of the relocation of global chains, nearshoring, are not yet perceived in the Foreign Direct Investment (FDI) that Mexico receives, analysts consider.
In the first quarter, new investments amounted to 932 million dollars (5 percent of total FDI), the lowest figure since 2014 (excluding the period of the Covid-19 pandemic), the investment bank said. usbs. This implies that 90 percent came from reinvestments, that is, from companies that already operate in Mexico, and another five percent from operations between companies.
“We do not want to be perceived as ‘deniers’ of nearshoring, since we recognize the growth potential for Mexico of this process, but we do not agree with the opinion that the FDI data confirm that foreign investment is already being supported by companies who move to Mexico,” said Rafael de la Fuente, chief economist for Latin America at the financial group.
The Ministry of Economy reported that FDI amounted to 18.6 billion dollars as of March, which represented an annual increase of 48 percent when compared to preliminary figures. In this regard, UBS considered that this comparison may not be adequate, since the correct one must be with real data. From that perspective, he explained, the increase was 17 percent.
“The data could be the perfect evidence that supports a nearshoring narrative (…) where there has been much speculation that Mexico would be the main beneficiary; however, when carefully evaluating the figures (…), only 5 percent are new investments”, agreed Alejandra Marcos, an analyst at Intercam.
He explained that Mexico offers advantages such as labor costs, skilled labor, logistics, T-MEC framework, proximity to the United States, among several others. “However, and despite the fact that we remain optimistic regarding the phenomenon, we will not see a significant change in the country’s economic growth in the short term,” he stated.
Analysts predict that FDI could close the year at around 40 billion dollars this year, due to the effect of the relocation of new industries. Banco Base sees up to 43 billion.
Entities in the center and north of the country are better prepared to attract and retain talent and investment, so they could get more out of nearshoring.
Meanwhile, the southern states present the greatest challenges to take advantage of the opportunities offered by this new type of investment.
The foregoing is part of the conclusions of the analysis “Nearshoring: opportunity that challenges Mexican entities”, of the Mexican Institute for Competitiveness, in collaboration with the Friedrich Naumann Foundation.
“Nearshoring can be an extraordinary opportunity, but it has to benefit all regions of our country. It cannot be an opportunity that only benefits the north or the center of the country, but must benefit the south, the southeast and all regions of the country”, considered Carlos Hank González, president of Banorte’s Board of Directors.
The Imco exemplified that electricity is obtained at more affordable prices in entities in the north and center of the country, such as Sonora, Chihuahua, San Luis Potosí and Aguascalientes.
This gives these regions a comparative advantage over the Baja California and Yucatan peninsulas, where the cost of electricity rises.
In the southern region of the country, on the contrary, the states that have less attractive conditions for locating companies and making investments are Guerrero and Oaxaca. The study showed that a greater “slack” in the labor market of entities such as the State of Mexico, Tabasco, CDMX and Durango, implies a greater number of people to join the employed population.
Monex improves GDP projection to 2.5% for this year
Grupo Financiero Monex raised its growth forecast for the Mexican economy for this year from 1.6 to 2.5 percent, which will be its expansion floor for the next five years, since it has been resilient and is at its recovery point, with no risks due to the presidential elections that will be close to develop.
The analyst of the financial group, Marcos Arias, anticipated that if Mexico manages to achieve greater progress in terms of the rule of law, security and infrastructure supply, the economy could have a much more attractive potential and grow at average rates of between 3.5 and 4.0 percent. cent in the next five years.
At a press conference, he stressed that, regardless of the outlook offered by the global economy, the country is at the point where it can be more master of its own destiny.
“There is an adage that says that if the US gets the flu, Mexico gets pneumonia; I think that we are at the moment that we could begin to say that if the US gets Covid-19, then Mexico put on face masks, with these issues of the rule of law, security and infrastructure ”.
He argued that Mexico’s presidential elections in 2024 will not be a decisive factor in stopping the growth trend.
“We believe that regardless of party, most of the candidates out there right now are nearshoring and investment friendly. We do not believe growth is at risk, regardless of the political spectrum,” she stressed.
With information from Ivonne Martínez