Background and Relevance
Francisco Cervantes, President of the Mexican Business Coordinating Council (CCE), sheds light on the significance of reinvestments in driving Mexico’s Gross Domestic Product (GDP) growth.
In the first quarter of 2025, Mexico reported a foreign direct investment (FDI) flow of $21.373 billion, according to data released by the Bank of Mexico (Banxico). This figure contrasts with $27.055 billion captured in the same period of the previous year.
Breakdown of Financial Resource Capture
A detailed analysis of the financial resources captured in the reported first quarter, as per the Balance of Payments, shows that 77.8% of the total Invested Foreign Direct (IFD) was registered as reinvestment of profits, amounting to $16.647 billion.
The remaining 14.69% of the total captured during this period corresponds to intercompany account transfers.
Only 7.42% of the $21.373 billion in IFD that entered between January and March of this year, the first trimester under President Claudia Sheinbaum’s administration, were new investments.
Experts’ Insights
Jonathan Heath, Sub-Governor of Banxico, emphasized that reinvestment of profits is not a minor detail when used to expand the operations of companies within the country where they generate their earnings.
Gabriela Siller, Banco Base’s Economic Analysis Director, and Gerónimo Ugarte Bedwell, Chief Economist at Valores Mexicanos (Valmex), a Mexican brokerage firm, warned that since 2021, approximately 80% of annual FDI has been registered on average during the first quarter of each year.
Valmex’s expert anticipated that the moderation in capital inflows at the beginning of the year could signal less FDI than previously observed in other episodes.
Key Questions and Answers
- What is the total FDI captured in Q1 2025? Mexico reported a foreign direct investment (FDI) flow of $21.373 billion in the first quarter of 2025.
- What percentage of FDI went to reinvestment? 77.8% of the total Invested Foreign Direct (IFD) was registered as reinvestment of profits, amounting to $16.647 billion.
- What percentage of FDI were new investments? Only 7.42% of the $21.373 billion in IFD that entered between January and March of this year were new investments.
- Why are reinvestments important for GDP growth? Francisco Cervantes, President of the Mexican Business Coordinating Council (CCE), explained that reinvestments are crucial for driving GDP growth.
- What do experts say about FDI trends since 2021? Since 2021, approximately 80% of annual FDI has been registered on average during the first quarter of each year, according to Gabriela Siller and Gerónimo Ugarte Bedwell.
- What could the moderation in capital inflows signify? The expert from Valmex anticipated that the moderation in capital inflows at the beginning of the year could signal less FDI than previously observed in other episodes.
