Record-Breaking FDI, but a Closer Look Reveals Concerns
The Mexican government proudly announced that Foreign Direct Investment (FDI) reached an all-time high, with a total of $34,265 million in the second quarter of 2025. This represents a 10.2% increase compared to the same period in 2024, when FDI stood at $31,096 million.
Who is relevant: The Mexican government, under the current administration, and the country’s economic stability.
Growth Drivers
- Increased investor confidence
- Stable macroeconomic environment
Details and Concerns
However, the fine print shows that 84.4% of this FDI is due to profit reinvestment by existing companies, with only 9.2% growth in new investments.
- New FDI grew by 9.2%, less than 10%
- Mexico attracted $3,149 million in new investments, a 246% increase from the previous year’s $909 million
- Reinvestment of profits accounted for 97.3% of total investments in the first two quarters of 2024
Historical Context: New investments used to make up 30-40% of FDI before 2008, driven by trade liberalization. Since then, profit reinvestment has dominated due to the global financial crisis.
Implications and Challenges
While profit reinvestment indicates established companies’ confidence, the decline in new FDI signals that Mexican governments have yet to enhance the country’s attractiveness for new capital.
- Brazil, facing similar international challenges, continues to attract significant FDI
- Mexico needs to overcome US protectionist policies and provide essential incentives for investors: rule of law, fair competition, legal certainty, and energy/infrastructure
Pemex’s Situation
President Claudia Sheinbaum’s Perspective:
- Pemex is a profitable company with great potential
- The main issue is the inherited debt from former presidents Felipe Calderón and Enrique Peña Nieto
- The strategic plan aims to reduce Pemex’s debt to $77,000 million by 2030
Expert Opinions:
- While the strategic plan has received positive feedback from credit agencies, energy experts and private economists believe Pemex’s core issue lies in its refinery-focused operational model and low production levels
- They suggest Pemex should shift towards exploration and petroleum extraction, and temporary relief from structured notes may not last without structural changes
Key Questions and Answers
- Q: What is the current state of FDI in Mexico?
A: FDI reached a record high of $34,265 million in Q2 2025, but new investments only grew by 9.2%. - Q: What are the concerns regarding Mexico’s FDI?
A: Despite the high FDI, profit reinvestment by existing companies makes up 84.4% of the total, indicating a lack of new capital attraction. - Q: How has Mexico’s FDI landscape evolved?
A: New investments used to constitute 30-40% of FDI before 2008; since then, profit reinvestment has dominated due to the global financial crisis. - Q: What challenges does Mexico face in attracting new FDI?
A: Mexico must overcome US protectionist policies and offer essential incentives for investors, such as rule of law, fair competition, legal certainty, and energy/infrastructure. - Q: What are the issues surrounding Pemex?
A: While President Sheinbaum highlights Pemex’s potential, experts emphasize the company’s operational model focused on refineries and low production levels as core problems.
