Geopolitical problems in Europe and the economic situation in China have made Mexico a viable option for international investors, especially because of its proximity to the world’s largest economy: the United States. Experts consider that, in addition, the country offers characteristics like few others in the region, such as stability in its public finances, in the exchange rate and in its institutions.
In the panel “The Future of Investments” at the inter.mx Expansión Summit 2022, representatives of funds, banks and large private equity investors reviewed the panorama that Mexico offers for business and where the interests of entrepreneurs point in the future. next months.
Investments in the country have been affected mainly by the difficult outlook for the global economy in the face of the latent risk of a recession in the United States, rising inflation, the evolution of the geopolitical conflict between Ukraine and Russia, energy problems in Europe and the effects of the Covid-19 pandemic in China.
However, Mexico has factors that help it within the foreign and national business environment. For Emilio Romano, director of Bank of America, Mexico has healthy public finances compared to other emerging countries. It also has the best location in the world as it is next to the US, which has shown more than ever that it is the most resilient economy and the one with the currency, which by definition remains a global benchmark.
“Because of the geopolitical issues with China and the issues with Russia, the country now looks better than ever to establish a reliable production chain at very attractive costs and salaries,” added Romano.
Arturo Saval, president of Nexxus, indicated that the world is closing; however, the country has the virtue of being in an open region, since the integration of small and medium-sized companies into supply chains has been increasingly noticeable to meet the needs of the North American market, for which it considers that it is a unique and enormous opportunity in a context in which the world is seeing waves of protectionism again after 20 years.
“We must not forget that the power that we see ahead for Mexico is unique at this time, due to that regionalization,” added the expert.
What are the investment prospects for Mexico?
The country has great potential due to its economic conditions, since foreign investors are currently focusing their attention on sectors such as logistics, digital development, health and financial penetration with fintech, the experts agreed.
Liliana Reyes, general director of the Mexican Association of Private Capital (Amexcap), said that the current context is very complex, particularly in terms of low growth and high interest rates, so the perspective of the private capital industry tends to discourage investment in the short term.
However, in the industry that she represents, the investment is not for the short term, but for the medium and long term. “The industry continues raising resources. Today, it has resources to invest for 3,000 million dollars for the short term, and for the medium and long term an amount of 20,000 million dollars is estimated, the most important being some infrastructure and real estate funds. Reyes said.
In the first half of 2022, 18 funds were raised, half of all that was registered in 2021, said the director of Amexcap, which shows that despite the conditions of the economy, the industry has not stopped. What is coming, he added, is the investment of venture capital in fintech companies, which has been very relevant in recent years.
“All private equity funds, there are more than 100 in the association, basically share a very important element: they raise resources from international and national institutional investors, such as Afores and insurers, to invest in Mexico,” Reyes said.
Among the most appetizing sectors for foreign investors are logistics, digital development and health, among others, said Sergio Méndez, CEO of BlackRock, who stressed that the context must not be forgotten, since Mexico represents an opportunity, with low imbalances , with domestic savings and a totally prudent fiscal policy.
“We cannot think of an investment context without a social dimension. We have to return to the positive impact that investment has in any economy, the fact of putting a peso to work and the multiplier effect that it has,” Méndez mentioned.
One of the sectors that has also attracted a lot of attention in recent times is that of tourist services, since Mexico has established itself as the tourist destination par excellence in North America, which, added to remittances, is financing a good part of consumption and make the country’s capacity, both for investment and consumption, remain stable.
The impact of inflation
For next year, the expectations for the global market are not the best, said Arturo Saval, president of Nexxus, as several issues are combined: inflation and other factors that are beyond the control of central banks, such as the geopolitical conflict in Europe and China’s prolonged anti-COVID policies.
“Inflation has two components: it is intrinsic to the production chains, which generates an effect that triggers prices. And the second point has to do with institutional certainty, since seeing a serious Bank of Mexico and attacking the problem within the measures, acting with determination and providing legal certainty is very important, I think that this part clearly helps”, he explained. Arturo Saval, president of Nexxus.