According to a report on June 2nd by Bloomberg,Jose Zozaya,who is the president of the American Chamber of Commerce in Mexico,expects the country to attract more than $22 billion in foreign direct investment (FDI) this year as the U.S. continues to bounce back from the economic downturn and more companies strive to diversify away from Asia. This is $2 billion more than Mexican Finance Minister Ernesto Cordero’s earlier forecast and an 18 percent increase over the $18.7 billion reported by Mexico’s central bank in 2010.
Zozaya,who is also president of Kansas City Southern’s Mexico operations, discussed the popularity of the country among foreign investors,“We’re seeing a lot of interest from big companies,including those in the Far East,for locating factories in Mexico.”
On average,Mexico has received 40 percent of its FDI from the U.S and since 2009 the U.S. has aided Mexico in efforts to increase its foreign investment. At $15.3 billion,the '09 numbers were the lowest in a decade and were directly connected to the recession in the U.S.
In 2011 Mexico's FDI is expected to continue accelerating,with a $135 million investment currently on the horizon from Kansas City Southern (KSU),and an $80 million project to build a new railroad terminal in Lazaro Cardenas is also in the works and expected to continue over the next several years.
According to an additional report by HSBC Mexico,another important factor in the country's FDI recovery will be continued improvements to the terms of trade with Mexico. The improved conditions are expected to occur due to a combination of two main factors,mainly the ongoing gradual appreciation of the Chinese renminbi and higher labor costs in China. Growing investor confidence in Mexico’s macroeconomic stability is also expected to play a major role in FDI recovery,which HSBC predicts will reach up to $25 billion this year,and as much as $28 billion in 2012.