IDB credits to Mexico: nearshoring

For 2022, the Inter-American Development Bank (IDB) announced a line of credit of 200 million dollars and 3 million dollars in non-refundable resources that will be channeled through the Development Bank, with the objective of financing the relocation of companies, especially in the southeast of the country.

For its part, IDB Invest will grant between 1.8 and 2.8 billion dollars in additional private financing to companies that want to relocate to the Isthmus.

According to the SHCP, the unprecedented trade situation will boost private investment in Mexico due to the phenomenon of relocation of operations to regions close to the target market (nearshoring).

The IDB estimates that the potential gain in the short and medium term for our country from nearshoring is 35 billion dollars, equivalent to 2.6% of the GDP derived from new merchandise exports.

IDB

Mexico is considered one of the countries with the greatest competitive and comparative advantages for foreign investment.

First, because of its strategic location and its network of more than 14 free trade agreements with 50 countries.

Second, because of its industrial development, such as in the transportation equipment sector, with a highly skilled workforce.

In this regard, the automotive industry is converting some of its plants to manufacture light vehicles and electric trucks to meet domestic and international demand.

At the same time, incentives in the United States to consume electric vehicles will be beneficial for Mexico since they will also apply to those assembled in the country. The SHCP foresees that this will allow domestic and foreign investment to continue to grow in the sector during 2023.

Given this scenario, Mexico will be able to consolidate its position as a leading exporter, strengthening employment in the country’s manufacturing and logistics sectors.

From the SHCP’s perspective, nearshoring opportunities are already being reflected in 2022 through a 42% increase in the demand for industrial space compared to that observed last year, and the construction of 4.7 million square meters of industrial space, double that of a year ago.

The phenomenon of the return of production processes to the U.S. from other parts of the world such as Asia (reshoring) will continue to generate sources of employment and production in entities commercially linked to Mexico.

In the case of Texas, the main trading partner, it generated 34,100 new manufacturing jobs between January and July 2022, about triple the number of jobs created in the same period of the previous year, reaching its highest level since November 2008 in July 2022.