Mexico breaks record in Foreign Direct Investment in 1Q2021

Mexico broke a record in its net arrivals of Foreign Direct Investment in the first quarter of 2021, with a year-on-year increase of 14.8%, to 11.864 million dollars, reported the Ministry of Economy.

By type of investment (origin of financing): through reinvestment of profits, 59.2%; for new investments, 18.6%; and by accounts between companies, 22.2 percent.

The new investments include those in fixed assets and working capital for the habitual accomplishment of commercial acts in Mexico; the contribution to the capital stock of Mexican companies by foreign investors; 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 part of the profits that is not distributed as dividends and that is considered FDI because it represents an increase in the capital resources owned by the foreign investor. And the accounts between companies are the transactions originated by debts between Mexican companies with FDI in their capital stock and other related companies residing abroad.

The figure represents the highest amount of Foreign Direct Investment received for the first quarter of the year since there are online records, this is at least since 1999.

Foreign direct investment

Likewise, the amount is the net result per company or trust, of the difference of 15,896.8 million recorded as inflows and -4,032.8 million in outflows.

Foreign Direct Investment flows were concentrated in the reinvestment of profits, although the subsequent adjustment of the figures could modify this result.

By sector: manufacturing received 46.6%; financial and insurance services, 14.6%; mining, 13.9%; trade, 11.5%; energy, 3.4%; and temporary accommodation services, 3.2%. The remaining sectors captured 6.8 percent.

By country of origin: United States, 42.5%; Spain, 12.1%; Luxembourg, 8.2%; United Kingdom, 5.5%; Canada, 4.8%; and other countries contributed the remaining 26.9%.

The amounts reported only consider investments made and formally notified to the National Registry of Foreign Investments of the Ministry of the Economy, hence their preliminary nature and that they undergo updates in successive quarters.