Net Foreign Direct Investment Decreases in 2022
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Net Foreign Direct Investment Decreases in 2022

Photo by:   LOGAN WEAVER, Unsplash
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Sofía Hanna By Sofía Hanna | Journalist and Industry Analyst - Thu, 03/09/2023 - 15:25

In 2022, Mexico’s net foreign direct investment, which measures both reception of foreign direct investment and investments of Mexicans in other countries, decreased by 30.6% when compared to the previous year, according to BBVA Research’s preliminary figures. However, Mexico’s reception of foreign direct investment grew to US$38.59 billion, reports the firm. 


The firm attributes the results to the reorganization of global supply chains and the nearshoring trend. Mexico’s net foreign direct investment registered US$22.44 billion in 2022 against the US$32.338 billion in 2021. The smaller number reflects larger investments abroad by Mexicans. "Although it will be necessary to wait for some time to know the final FDI figures for 2022, this indicator shows an annual drop as Mexican direct investment abroad was US$16,146 million versus the preliminary figure of -US$369 million in 2021 even though FDI reception in Mexico was US$38,588 million. Therefore, the higher FDI flows to Mexico show that the benefits of integration into global value chains continue," according to BBVA Research.


The Mexican government reports that Mexico received US$35.29 billion in foreign direct investment in 2022, a 12% increase compared to 2021, when there was an investment of US$31.54 billion. These results come mainly from the US (US$ 15 billion) and Canada (US$ 3.8 billion), followed by Argentina, Japan, the UK, Spain, Korea, Hong Kong, France and China. Transnational companies with corporate headquarters in Mexico generated investments of US$5.5 billion.


Mexico could attract up to US$60 billion in foreign investment if it changes its business environment, says Mario Augusto Correa, President, National Economic Studies Committee of the Mexican Institute of Finance Executives (IMEF). "If we had a different business framework and a more conducive environment for the industry, investment should double," said Correa during the Economic Perspectives for a Turbulent Year panel organized by the IMEF

BBVA Research expects a smaller deficit this year in the trade balance, given the expectation of lower economic growth compared to 2022. Meanwhile, nearshoring and the relocation of global supply chains is expected to continue favoring investment flows to Mexico in the medium and long term. But to increase the benefits of this global trend, the country will need to invest more in many areas including electricity infrastructure.

Photo by:   LOGAN WEAVER, Unsplash

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