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Mexico Foreign Direct Investment to Hit $40 Billion by 2016

21 February, 2014

Foreign direct investment will reach $40 billion in Mexico by 2016 following the string of recent reforms in the nation’s telecom, banking and energy sectors, stated Economy Minister Ildefonso Guajardo.

“The reforms will help spur a higher average level of investment in the country,”  Guajardo told Reuters. “I think it will be a mixture of not only investment in energy and telecom, but also investment attracted to new opportunities in manufacturing.”

Perhaps most notably, the reforms opened Mexico’s state-run energy sector to private investment late last year, while earlier telecom reforms will promote greater competition in the industry, which has been dominated by companies owned by Carlos Slim, one of the world’s richest men.

On average, Mexico received around $23 billion annually in foreign direct investment (FDI) between 2000 and 2012, according to the economy ministry. In 2013 Guajardo says FDI in Mexico hit a record high of $35 billion, in large part due to the fact that Belgian-based Anheuser-Busch purchased Mexican brewer Modelo. In 2014, Guajardo expects FDI to hit at least $22 million – a conservative number according to some analysts.

Although there is still work to be done in the Mexican government to write secondary legislation that will help make the energy and telecom reforms move forward smoothly and with deliberate purpose, all signs point to this happening in the very near future so bidding can begin and outside investors can begin developing the nation’s considerable – and largely untapped – energy resources.

The North American Free Trade Agreement (NAFTA) remains a major driving force behind Mexico’s swelling prosperity, prompting manufacturers to build new factories and cash in on the nation’s low labor costs and favorable geographical location – a factor that is becoming increasingly important as fuel costs continue to rise, making China less attractive to businesses worldwide. 

In an unmistakable nod to Mexico’s growing power on the world stage,NAFTA partners Canadian Prime Minister Stephen Harper and U.S. President Barack Obama met with Mexican President Enrique Peña Nieto this week to discuss new ways to strengthen economic ties between the three countries, a move that analysts project will substantially increase prosperity for all three nations in the coming years.

Topics: Investment Mexico