Nearshoring is boosting investment in Mexico, but this movement of production centers to closer to the US market will not likely prevent a slump in foreign direct investment (FDI) in 2023.
Mexico is expected to receive $35.1bn in FDI this year, but that amount will contract to $33.2bn in 2023 and to $33.8bn in 2024, according to a survey by Mexico's central bank (Banxico) among 37 banks and economic consultants this month.
In 2021, Mexico was the ninth-ranked country for FDI, with $31.7bn, according to a recent study by Barclays bank.
And nearshoring will benefit multiple sectors of the Mexican economy, the studies project.
Demand for industrial space for nearshoring in Mexico reached 1.2mn m² in the first three quarters of 2022, nearly double the 700,000 m² recorded in 2021, a recent report from Dallas-based real state company CBRE showed.
Such demand comes from manufacturers of auto parts, furniture, machinery and electronics, among others, while Monterrey and Saltillo, in Mexico's northeast, are so far the main destinations for those companies, according to CBRE.
Also airports in northern Mexico industrial hubs such as Tijuana, Ciudad Juarez and Monterrey have increased their passenger traffic by 56.8pc, 34.6pc and 33pc, respectively, in 2022 as a result of nearshoring, a recent report from Mexican bank Monex said.
Official FDI figures for 2022 support this trend as Mexico received $32.1bn in FDI from January to September, up by 30pc from $24.8bn in the same period of 2021 and the highest of any similar period, according to Mexico's economy ministry data.
But for most observers, the global economic slowdown will still restrict flows of FDI in 2023 despite the growth in nearshoring.
"It is not entirely clear that the [nearshoring] phenomenon is enough to trigger a new investment cycle in Mexico," Mexico's bank Intercam said, because "high interest rates and tight financial conditions globally could limit the financing capacity of new investments."
