Search

 

Cablegate: Fdi in Mexico Expected to Reach 23 Billion Usd

VZCZCXRO6034
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #4726 2431922
ZNR UUUUU ZZH
P 311922Z AUG 07
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 8700
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS MEXICO 004726

SIPDIS

SENSITIVE
SIPDIS

STATE TO WHA/MEX FOR ELIZABETH WOLFSON
STATE TO EEB/IFD/OIA FOR JOHN FINN
USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GERI WORD
TREASURY FOR IA (ALICE FAIBISHENKO)

E.O. 12958: N/A
TAGS: EINV ECON EFIN MX
SUBJECT: FDI IN MEXICO EXPECTED TO REACH 23 BILLION USD

REF: MEXICO 3124

Summary
-------

1. (U) Summary. The Mexican government revised its foreign
direct investment (FDI) forecast for 2007 upward to 23
billion USD after a stronger than expected first half of the
year. The manufacturing sector is the number one recipient
of FDI, while the United States continues to be the number
one investor. The numbers are promising, but need to be
repeated trimester over trimester to prove that Mexico has
increased its pull on FDI. End Summary

FDI for 2007 25% More Than Last Estimate
----------------------------------------

2. (U) The government of Mexico (GOM) revised its FDI
forecast for 2007 after investment figures from the Bank of
Mexico showed stronger than expected investments for the
January to June period. The new forecast, 23 billion USD is
25.6% more than the forecast issued at the end of 2006, of
18.3 billion USD. If Mexico achieves the forecast it would
post the largest annual investment since 2001.

3. (U) The GOM estimates investment for January-June 2007 is
13.2 billion USD, 52% more than for the same period last
year. This includes 9.4 billion USD that has actually been
reported, and an additional 3.8 billion USD that the
Secretariat of Economy (Economia) estimates will be reported

SIPDIS
in the future. The estimate is consistent with Economia
methodology. Director General of Direct Investment, Gregorio
Canales Ramirez previously explained to EconOff that FDI
annual figures can increase by billions of dollars after the
initial reports as companies frequently submit information on
investments many trimesters after the investments were
actually made. FDI for this period is the second largest in
Mexican history, bested only by the second half of 2001,
which included a 12.5 billion USD acquisition of banking
company Banamex by Citigroup.

Major Players: Manufacturing Sector and U.S. Investors
--------------------------------------------- ---------

4. (U) Of the investment, 43.3% (5.7 billion USD) was
directed towards new investments, 21.2% (2.8 billion USD) on
reinvestments and 35.4% (4.7 billion USD) on investment
between company accounts. The primary recipient of FDI
continues to be the manufacturing sector with 44.2%. The
financial services sector received 29%. The transportation
and communications sector only received 3.9%. The United
States continues as Mexico's primary source of investment
with 60.7% of total FDI. Spain was second with 13.9%. Tax
friendly Bermuda, Virgin Islands and Holland were the source
of a combined 15.1% (reftel).

Comment
-------

5. (SBU) Though the numbers look positive, it is too early
for the Calderon administration to declare victory. The
increase in investment is being billed by the GOM as proof
that Mexico is a promising location for foreign investment.
The numbers do show potential. Over the past seven years the
average FDI for the January to June period has averaged only
10 billion USD. That being said, FDI in Mexico is subject to
large fluctuations, usually attributable to acquisitions
(such as the previously mentioned Citigroup purchase) and
other one-time investments. If the country can consistently
see year over year improvement in FDI, particularly in
neglected sectors such as transportation and communication,
then there would be cause for increased optimism and proof
that President Calderon's push to attract FDI has been
successful.


Visit Mexico City's Classified Web Site at
http://www.state.sgov.gov/p/wha/mexicocity and the North American
Partnership Blog at http://www.intelink.gov/communities/state/nap /
GARZA

© Scoop Media

 
 
 
World Headlines

 

UN SDG: UN Appoints Twenty Eminent Thinkers To Shed New Light On The World’s Greatest Challenges

New York, 21 January 2021 – Twenty prominent personalities, globally renowned for their intellectual leadership in economic and social fields, will form the second United Nations High-level Advisory Board (HLAB) on Economic and Social Affairs, the ... More>>

UN: As COVID Deaths Pass Two Million Worldwide, Guterres Warns Against Self-Defeating ‘Vaccinationalism'

With more than two million lives now lost worldwide to COVID-19, the UN Secretary-General appealed on Friday for countries to work together and help each other to end the pandemic and save lives. In a video statement , Secretary-General António Guterres ... More>>

UN: Violent Attempt At US Capitol To ‘overturn’ Election, Shocking And Incendiary

A group of independent UN rights experts released ... More>>

UN: Guterres To Seek Second Five-year Term
António Guterres will be seeking a second five-year term as UN Secretary-General, which would begin in January 2022.... More>>