Paradoxical Economic Landscape in Mexico
According to data released yesterday, a peculiar situation is unfolding in Mexico’s economy. TTR Data reports that there were 176 mergers and acquisitions (M&A) between January and August of this year, a 33% decrease from 2024. Simultaneously, the Secretaría de Economía reported that Foreign Direct Investment (FDI) totaled $34,265 million in the first half of 2025, a 10.2% annual increase—the highest figure ever recorded for a first half.
Understanding the Paradox
The apparent contradiction can be explained by the composition of FDI. The M&A market reflects the desire to acquire companies, while FDI includes new investments, intercompany accounts, and reinvestment of profits. Currently, 84.4% comes from profit reinvestment: multinationals prefer expanding plants and modernizing lines rather than acquiring other companies.
Value of Operations and New Investments
Despite fewer transactions, the value of operations increased by 23%, thanks to large acquisitions like Infraestructura Portuaria Mexicana’s purchase by Mediterranean Shipping Company (founded in Italy, headquartered in Switzerland) for $800 million in July. More encouragingly, new investments surpassed $3,149 million, a 246% increase from 2024.
Impact on Small and Medium Enterprises (SMEs)
At the core of the economy, SMEs—contributing over 70% of employment and nearly 52% of GDP—continue to lag behind. The CONCANACO reported that the Labor Day festivities will generate $37,500 million this year, a 7.1% increase from 2024. This temporary relief benefits businesses, hotels, and restaurants. However, Beatriz Hernández Rojas from COPARMEX Querétaro warns that the lack of financing, digitalization, and certifications leaves thousands of companies out of the value chains created by nearshoring.
Employment Opportunities
The absence of M&A reduces opportunities for skilled jobs. A merger not only involves layoffs but also creates spaces in technology integration, process administration, or expansion into new markets requiring engineers, analysts, and corporate lawyers. Stopping these operations stifles labor dynamism while SMEs, limited by credit and productivity, barely maintain existing jobs.
Consequences
The consequences are clear. For private investment, fewer M&A mean less dynamism in asset trading, but record-breaking FDI indicates that Mexico remains attractive for expanding operations. For SME survival, without credit and digitalization, mortality rates will remain high, beyond the temporary relief provided by September holidays.
GDP Growth
Concerning GDP, cyclical consumption inflates quarterly figures, but sustained growth depends on FDI translating into machinery, technology, and training rather than just balance sheets. Currently, more money enters the country than leaves; President Claudia Sheinbaum’s challenge is to turn this into productivity, quality jobs, and a less vulnerable SME ecosystem.
Key Questions and Answers
- Q: What is the paradox in Mexico’s economy? A: The apparent contradiction is that while mergers and acquisitions (M&A) have decreased, Foreign Direct Investment (FDI) has reached record levels. This situation reflects multinationals’ preference for expanding existing operations over acquiring new companies.
- Q: How do fewer M&A and increased FDI affect SMEs? A: Fewer M&A reduce opportunities for skilled jobs, while increased FDI does not directly benefit SMEs if it doesn’t translate into machinery, technology, and training.
- Q: What challenges do SMEs face in Mexico? A: SMEs struggle with limited access to credit, digitalization, and certifications, hindering their participation in value chains created by nearshoring.
- Q: How does the current economic situation impact GDP growth? A: Cyclical consumption inflates quarterly GDP figures, but sustained growth depends on FDI translating into productivity and machinery.
