Foreign Direct Investment (FDI) in Mexico rose 17% - nearly one third – to hit $5.73 billion during the last quarter of 2016, compared to the same period in 2015, reported Morningstar. The rise comes despite the inflammatory political rhetoric of newly elected U.S. President Trump, who has made a series of threats that seem aimed at undermining the continued growth of Mexico’s economy.
“The fourth quarter brought foreign direct investment [in Mexico] for full-year 2016 to $26.74 billion,” wrote Morningstar.
Trump has threatened to impose a border tax on companies that decide to move new production facilities to Mexico, which has raised concerns that companies deciding where to invest money could hold off until businesses receive more clarity on this administration’s plans, but experts believe the impact – if any – will be short lived and limited to manufacturing.
“And that could be offset by increasing foreign investment in Mexico’s oil and gas sectors,” stated Goldman Sachs Latin America economist Alberto Ramos.
According to Mexico’s Economy Ministry, in 2016 the United States continued to lead in Mexico among the 72 countries that contributed to the nation’s foreign direct investment totals, making up 38.9 percent of the total, trailed by Spain, Germany, Israel and Canada.
“A collapse is unlikely,” shared Barclays chief Mexico economist Marco Oviedo. “Not all of the investment is in manufacturing, and not all of it comes from the U.S.”
German engineering giant Siemens recently committed to investing another $200 million in Mexico, which is projected to become several billion over the next 10 years, and last October Cisco pledged to invest $4 billion in Mexico over the next two years, boosting output of products that range from routers and servers, to switches and wireless access points. TransCanada has also announced major moves in Mexico with the launch of an $800 million marine port and pipeline project that will transport refined products from prime coastal real estate to central Mexico.
“There are not many markets in the world where you can build a refined products infrastructure project of this scale, and Mexico is one of them,” shared Ivan Sandrea, who serves as CEO of Sierra Oil and Gas, which is joining with the Calgary-based pipeline owner on the project.
The continued interest among foreigners who decide to invest in Mexico’s economy is, at least in part, due to the exceptional return on investment that can often be experienced. From major international corporations and conglomerates, to individuals who are buying investment properties in Tulum, Puerto Aventuras and Playa del Carmen in Mexico’s Riviera Maya, when it comes to deciding where to invest money, Mexico has plenty to offer.