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News Article

Investments in Mexico Kept at Bay Due to Lack of Certainty

By Sofía Hanna | Thu, 07/14/2022 - 18:22

Despite supply chain issues, Mexico has many new opportunities thanks in part to its proximity to the US. During a press conference, Daniel Becker, President of, Association of Banks of Mexico (ABM), said that investments are ready to enter the country but there are still issues to be resolved. For that reason, companies from both Mexico and the US are asking Mexican President Andrés Manuel López Obrador to speedily address matters, such as the energy reform, to foment investment in Mexico. 

 

According to FocusEconomics, global economic expectations are at risk given supply chain disruptions, a possible US recession and erratic domestic policies. However, Mexico continues to see a growing influx of remittances and numerous opportunities brought about by nearshoring, mainly since some of its industrial sectors have performed better than in other regions. While this does not mean the country is in an excellent economic position, it points to an interest in investing in the country despite disruptions.

 

Mexico is expected to receive over US$40 billion in investment from US companies by 2024, said Becker, but these investments are on hold until those companies have more certainty on terms related to the energy reform and other issues. “What is being suggested is that there should be more and more legal certainty; that there should be clear conditions to understand the investment mechanisms,” said Becker. 

 

Companies from the US and Mexico have asked López Obrador to speed up the mechanisms that generate that certainty so the country can obtain these investments as soon as possible. The opportunities to integrate both countries commercially cannot be missed and would alleviate some of the uncertainty caused by global tensions, according to Bloomberg.

 

“Although the diagnosis on the investment situation was already made. This dialogue lets us know that we are in a hurry. If we act sooner, we will have better results, bringing better conditions for Mexicans and greater integration and better elements to control inflation as a bloc,” said Becker.

 

However, Mexico’s disputes and issues around investment go further. According to the International Chamber of Commerce (ICC), Mexico is one of the countries with the highest number of disputes involving companies and the government, specifically in the energy and infrastructure industries. To date, the disputed projects are estimated to be worth over US$30 billion, which led Mexico to review its energy policies to avoid international conflict, as previously mentioned in MBN. The US and Canada have raised concerns around the matter, given how these issues have already threatened foreign investment. 

The data used in this article was sourced from:  
MBN, Bloomberg, ABM
Photo by:   Erin Larson, Unsplash
Sofía Hanna Sofía Hanna Journalist and Industry Analyst