Mexico's FDI Rises 7.2% in First Half of 2024

Foreign Direct Investment (FDI) in Mexico totaled US$31.1 billion (MX$584.3 billion) during the first half of 2024, reflecting a 7.2% increase compared to the same period last year, as reported by the Ministry of Economy (SE). The United States continues to be Mexico’s top investment partner, contributing 44% of the total FDI inflows.

The breakdown of FDI resources includes US$30.3 billion from the reinvestment of earnings, US$909 million from new investments, and a negative US$101 million from intercompany accounts, which involve financial transactions between Mexican companies and their foreign parent companies. The Ministry emphasized that the record level of earnings reinvestment, seen for the second year in a row, underscores Mexico’s economic stability and its favorable business environment, which make the country an attractive destination for companies looking to expand their operations.

Reinvestment of earnings refers to the profits retained within a company rather than distributed as dividends, and is considered FDI because it enhances the capital base of foreign investors in Mexico. The Ministry also pointed out that the positive trend in intercompany accounts suggests that companies maintain solid liquidity, allowing them to manage debt and facilitate internal loans within corporate structures.

Germany and Japan followed as major investors, accounting for 13% and 10% of the total FDI, respectively, in the second quarter of 2024. Additionally, 68% of FDI was concentrated in five key states, with Mexico City leading the way at 46%, followed by Nuevo Leon (7%), Baja California (6%), and the State of Mexico (5%).

The manufacturing sector captured 54% of the FDI, with notable investments in industries such as transportation equipment, beverages and tobacco, chemicals, computer equipment, food, metals, and plastics and rubber.

From Jan. 1 to Jul. 31, 2024, SE recorded 166 private sector announcements, amounting to US$48.04 billion in expected investment, which is anticipated to flow into the country over the next two to three years.