Mexico climbed four positions among countries that attract the most Foreign Direct Investments (FDI) globally during 2017. According to the United Nations Conference on Trade and Development, Mexico climbed from 16 to 12 place.
Mexico received FDI for $30 billion, a figure similar to that of a year earlier, which was highlighted by UNCTAD, considering the uncertainty caused by the renegotiation of the North American Free Trade Agreement.
“Foreign investment in the automotive industry, which is usually strong, reached a new peak with $7 billion, 32 percent more. Also, flows toward construction, transport and telecommunications almost doubled and investments towards trade grew 65 percent,” they said.
Half of the top 10 countries are developing economies, with China having record entries, despite an initial slowdown in the first half of 2017. France, Germany and Indonesia also made significant jumps in the list.
Global FDI flows fell 23 percent in 2017 to $ 1.43 trillion. The decrease contrasts sharply with other macroeconomic variables such as GDP and trade, which experienced a substantial improvement in 2017.
Projections of higher economic growth, trade volumes and commodity prices usually point to a further potential increase in global FDI by 2018. However, according to UNCTAD, risks are important and political uncertainty abounds. Escalation and rising trade tensions could adversely affect investment in global chains.
Also, fiscal reforms in the United States and increased fiscal competition are likely to significantly affect global investment patterns.
Longer-term forecasts of macroeconomic variables contain major disadvantages, including the prospect of an increase in interest rates in developed economies, with potentially serious implications for emerging market currencies and economic stability.