Mexico loses foreign investor confidence index ranking due to AMLO administration decisions

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Mexico is out of the 25 most attractive FDI economies

ZETA – Constellation Brands optó por no litigar cancelación de ...
Constellation Brands brewery

The cancellation of the Constellation Brands brewery, the change in energy policy, as well as the execution of investments that are expected to have a low social return (Dos Bocas, Tren Maya and the Santa Lucía airport), among the causes of Mexico’s exit from the ranking of countries with greater confidence for foreign investment.

AT Kearney attributed the departure of Mexico from the ranking of countries with greater confidence for foreign investment decisions such as cancellation of the NAIM

Mexico was left out of the 2020 Foreign Direct Investment Confidence Index , prepared by the consulting firm AT Kearney, which evaluates the 25 countries that most attract and retain foreign capital.

In the previous edition, Mexico fell eight positions , to be placed at 25.

The 2020 ranking was led by the United States, followed by Canada, Germany, Japan and France.

AT Kearney attributed Mexico’s exit from the classification to decisions such as cancellation of the New Mexico City International Airport; prioritization of investments with low economic and social impact, such as the Dos Bocas refinery, the Santa Lucía airport and the Maya Train; changes in the rules of the energy sector, and brake on approved investments as in the case of the Constellation Brands beer plant.

“ Mexico needs to regain investor confidence. Despite the ratification of the Treaty between Mexico, the United States, and Canada (USMCA) and the nearshoring effect, Mexico needs to refocus its efforts to strengthen the macroeconomic environment and its regulatory and governance factors, “added the consultant. Since AT Kearney issued this classification in 1998, Mexico has been out of it only in 2011.

“As the Covid-19 crisis unfolded, investor confidence declined across the board – developed, emerging, and border markets – reflecting the rapid development of the pandemic,” said Ricardo Haneine, director and partner at Kearney Mexico.

ranking of countries with greater confidence for foreign investment
Ranking of countries with greater confidence for foreign investment.

“There appears to be a return to fundamental factors, to larger and more stable markets with more predictable political and regulatory structures, and this reinforces interest in developed economies,” he added.

The results suggest that investors were not fully aware of the impact of the crisis. AT Kearney concluded that the rapid effect of Covid-19 should serve as a wake-up call that executives cannot assume continuity in the global operating environment. Implementing strategic forecasting tools and improving strategic planning to better predict and plan for crashes is paramount.

Haneine explained that the result for Mexico was also influenced by the low historical and expected growth of economic activity, as well as the lack of an economic and social development plan “with a clear and articulated strategic vision”, and exchange rate volatility.

In the overall standings, the United States remained in first place for the eighth consecutive year, Canada regained second place as in 2018, and Germany fell to third

Meanwhile, developed markets dominated the 2020 Index. The pull for large, stable markets is reinforced by the uncertainty caused by the Covid-19 pandemic, leaving only three emerging markets in the top 25 positions: China, UAE and Brazil.

In contrast, with 14 countries in the top 25 positions in the ranking, Europe is the region with the highest participation.

Source: eleconomista.com.mx, forbes.com.mx

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