Mexico captured US $ 2,437 million in FDI in the third quarter of 2020

Mexico captured 2,437 million dollars in Foreign Direct Investment (FDI) in the third quarter of 2020, reported the Ministry of Economy.

Of that total, 1,711 million dollars corresponded to new investments; 676 million to reinvestments and 49 million to intercompany accounts.

In its quarterly report July-September 2020, the Bank of Mexico recommended continuing to work on correcting institutional and structural problems that for years have led to low levels of investment and that have prevented the country from increasing its productivity.

Likewise, as mentioned before, the effort to strengthen the rule of law, combat insecurity, corruption, and impunity, and guarantee respect for property rights must continue.

FDI 

The new investments include those in fixed assets and working capital for the regular conduct of commercial acts in Mexico; the contribution to the capital stock 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 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.

Pandemic

During 2020, Covid-19 implied shocks that affected all countries in a generalized way, having repercussions on economic activity, inflation and global financial conditions.

Thus, after a deep global economic contraction in the second quarter, a recovery began to be observed during the third quarter of the year, mainly due to the reopening of various productive activities.

This recovery has been partial and there is still a high degree of uncertainty about the pace it will take in the coming quarters, which will depend, among other factors, on the evolution of the pandemic itself and the behavior of the different components of aggregate demand and sectors.