In addition to its geostrategic location and extensive network of free trade agreements, Mexico has established itself as a key emerging country within the global economies. Thanks to its macroeconomic stability, strong domestic consumption, labor force, natural resources and diversified economy, Mexico is today one of the most competitive countries in which to do business. In addition, as a member of the T-MEC, the OECD, the WTO, the G20, ALADI, and the Pacific Alliance, Mexico is a member of various multilateral and regional organizations and forums that help boost its profile as an attractive engine for FDI.
Mexico is currently the sixteenth largest economy globally, the second largest in Latin America (behind Brazil), and the tenth largest recipient of FDI worldwide.[1] In the first quarter of 2022 alone, a figure of just over USD 27 million has been reported, without losing sight of the impact of two extraordinary transactions (the Univision-Televisa merger and the restructuring of Aeromexico).[2]
Historically, the FDI sectors that have been predominant in the Mexican economy have been manufacturing, mining, retail and wholesale trade, and communications. However, thanks to the substantial increase in digital services in a globalized world, Mexico has begun to diversify the use of new technologies in the financial sector. Through the development of startups with a fintech focus, Mexico has joined the diversification of financial institutions that employ innovative activities for the automation of services and technological development of their financial processes.
According to the “Fintech Radar 2021” prepared in collaboration with Finnovista, the IDB and the Pacific Alliance, the Fintech ecosystem in Mexico is booming thanks in large part to a solid legal framework that fosters trust and growth within this sector. In 2021 alone, there were more than 500 FIntech startups, so Mexico has established itself as one of the most dynamic markets in Latin America in this sector with an approximate growth of 16%.[3]
However, like many countries, the Mexican economy continues to weather the ravages of the pandemic and more recently the global economic consequences of the geopolitical conflict between Ukraine and Russia. Therefore, today more than ever, Mexico needs to emphasize its competitive advantages, such as its geographic proximity to the United States and low operating costs for skilled labor.
Against a backdrop of global geopolitical instability, Mexico has great potential to navigate new trade and investment opportunities. Through active industrial policies such as the development of specialized clusters in strategic sectors, it will be possible to trigger greater participation among governments, companies, universities and civil society leaders, both national and foreign.
It is reasonable to assume that Mexico will face several economic challenges at the end of the year, but at the same time these can be turned into opportunities; for example, through reshoring or nearshoring strategies with its main trade ally: the United States. With this, the Mexican economy would be able to reaffirm itself as the gateway to receive investments to position itself in North America and open the way to new business opportunities with its commercial allies in other latitudes.
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[1] https://unctad.org/webflyer/world-investment-report-2022
[2] https://www.gob.mx/se/articulos/mexico-registra-27-511-6-millones-de-dolares-de-ied-en-el-primer-semestre-de-2022-312017
