Mexico is positioned as an ideal candidate for the relocation of companies, nearshoring, thanks to trade openness and the multiple international trade agreements it has, with the Trade Agreement between Mexico, the United States and Canada (T-MEC) being especially relevant. 

Added to these factors is the geographical location that reduces the risks related to supply chains, in addition to the competitive workforce, related to the population pyramid that has 66% of its population of productive age and the solid performance of the national industry and the export sector, especially that oriented to manufacturing, since this sector represents 90% of exports.

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The above emerges from an analysis by HR Ratings in which it highlights that so far, it is premature to estimate all the scope that nearshoring will have in Mexico, but it considers that, if the expected investments materialize, they will impact the medium and long term positively to the economy.

The securities rating agency highlighted that greater investment by private companies must also be accompanied by an increase in employment. So a stronger labor market will have a positive effect on consumption levels and as a result, an increase in aggregate demand could be observed.

“Additionally, companies that set up shop in Mexico must have not only tax incentives such as those recently announced by the Ministry of Finance, but also sufficient public infrastructure to be able to carry out their operations,” the rating agency indicated.

Although a series of investment projects have been announced in the northern part of the country and tax incentive decrees for private companies to seek to establish themselves in the national territory promoting nearshoring, a quantifiable impact on Foreign Direct Investment (FDI) has not yet been observed. ) of the balance of payments in 1H23, although the reinvestment of profits in 1Q23 was a positive fact after reaching a figure of 21.3 billion dollars, its highest amount since records have been recorded.

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HR Ratings indicated that the maximum amount of profit reinvestment could be related to greater investments to expand the production capacity of companies that currently operate within the national territory.

Finally, he said that "although there are companies that have so far mentioned their intention to invest in the national territory oriented towards manufacturing production, we consider that it will not be until 2024 when the entry of these flows into the balance of payments will be recorded."

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Original note