Mexico’s FDI hikes 19.6% to an all-time quarterly record
Mexico attracted US$ 9.52 billion of Foreign Direct Investment (FDI) in the first quarter of 2018, an increase of 19.6% compared to the preliminary figure of the same period last year, the highest preliminary figure for a three-month period in the history of the indicator, reported the Ministry of Economy. So far in the current federal administration, the variable totals US$ 182 billion.
The quarterly figure is the net result of US$ 11.5 billion for inflows, minus US$ 1.98 billion counted as decreases in FDI or divestments. By type of investment (source of financing), 76.8% corresponded to reinvestment of profits, 14.4% to new investments and 8.8% to intercompany accounts.
The new investments include those in fixed assets and working capital for commercial activity 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.
Meanwhile, the reinvestment of profits corresponds to the portion of profits that is not distributed as dividends and that is considered IED because it represents an increase in capital resources owned by the foreign investor. The intercompany accounts are the transactions originated by debts between Mexican companies with FDI in their capital stock and other related companies abroad.
Manufacturing received 35.2% of FDI in the first quarter, followed by the financial services (29.8%), mining (7.1%), commerce (6.9%) and construction (6.0%) sectors. The rest obtained 15%.
Considering the origin of investments, 43.6% came from the United States, 18.6% from Spain, 8.6% from Canada, 5.9% from Australia and 5.1% from the Netherlands. Other countries contributed the remaining 18.2%.
The figures reported only consider investments made and formally notified before the National Registry of Foreign Investments of the Ministry of Economy; hence, its preliminary nature and the possibility of upward upgrades in the successive quarters. Only preliminary figures published at the time are compared to avoid distortions. The aforementioned is due to the fact that the updated amounts for periods prior to the reporting include several upward revisions of each quarter due to having more information reported.
The methodology for determining FDI is based on international standards, contained in the Manual of Balance of Payments of the International Monetary Fund (IMF) and in the Framework Definition of Foreign Direct Investment of the OECD.