FDI in Mexico hikes 14% in first half of 2018; more than a third coming from the US

Mexico received US$17.8 billion of Foreign Direct Investment (FDI) in the first half of the year, a 14% increase compared to the preliminary amount from the same period of the previous year, informed the Ministry of Economy.

The amount of the investments received is the highest since the first semester of 2013, when the energy reform was approved and investment flows totaled US$23.8 billion. In addition, the growth rate is the highest recorded in the last three years.

Half-yearly FDI is the net result of the sum of US$20.4 billion for inflows, minus US$2.6 billion, recorded as decreases in FDI. It came from 2,392 companies with foreign capital.

By type of investment (source of financing), 58.1% was through reinvestment of profits, 16.9% through new investments, and 25% through inter-company accounts. Manufacturing accounted for 43.1% of the total, followed by financial services, 19.4%; electricity, water and gas, 8.4%; trade, 8.2%; and mining, 6.3%. The remaining sectors captured 14.6%.

By country of origin, the United States contributed 39.1%, followed by Spain with 15.4%; Germany, 8.8%; Canada, 7.1%, and Japan, 5.9%. Other countries contributed the remaining 23.7%.

During the present administration, Mexico carried out a series of reforms of the FDI regime, which mainly affect the telecommunications and broadcasting sector, the financial sector and the energy sector.

It also simplified the procedures related to the registration of the FDI, which does not require authorization, and the requirements for the presentation of statistical information.

In the second quarter of the year, Mexico received US$6.7 billion, an increase of 19.7% compared to the preliminary amount of the same period of the previous year, informed the Ministry of Economy. New investments totaled US$1.5 billion, which represented a year-on-year drop of 50.3%.

The new investments include those in fixed assets and working capital for the habitual performance of commercial acts in Mexico; the contribution to the social capital of Mexican companies by foreign investors; the transfer of shares by Mexican investors to direct investors, and the initial amount of the consideration in the trusts that grant rights over the FDI. The other two components of FDI had positive behaviors.

The reinvestments were for US$1.3 billion, an increase of 13.1%; while inter-company accounts totaled US$3.9 million, an increase of 83%, at annual rates.

The methodology for determining FDI is based on international standards, contained both in the Manual of Balance of Payments of the International Monetary Fund (IMF) and in the Framework Definition of Foreign Direct Investment of the Organization for Economic Cooperation and Development (OECD).

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