Narayan AmmachchiMexican companies resumed their foreign bets during the second quarter of 2023, making up for the return of capital seen during the first months of the year.
According to the Bank of Mexico, investments of Mexican companies outside the country totaled US$2.54 billion between April and June, up from a fall of US$722 million in the first quarter.
Companies are moving capital abroad through the construction of new production facilities or through acquisitions.
This trend of entrepreneurs investing outside their home countries is not limited to Mexico. Argentina, Brazil and Colombia were among the other countries that saw outflows, according to the ECLAC.
In 2022, Latin American firms invested a staggering US$74.6 billion outside their country of origin, up 80% from the previous year.
However, no country saw more capital move out than Mexico: Mexican businessmen’s investments abroad accounted for 23.3% of all regional FDI. According to the ECLAC, this represents a 245% increase from the previous quarter and is the highest FDI outflow from Mexico since 2019.
Mexico’s industrial sector remains depressed, as technology and capital are underinvested. The business environment in Mexico is also discouraging, with high levels of insecurity, low competitiveness, and weak rule of law.
These challenges were highlighted in the World Competitiveness Yearbook, which ranked Mexico 55th out of 64 economies.
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