The general mood of uncertainty both at a national and international scale will likely cause a 30% drop in Mexico’s Direct Foreign Investment , said the chief economist of Scotiabank Mario Correa .
This forecast implies that the country’s foreign capital inflow will drop below the average of USD$30 billion that was registered in the past few years.
The annual foreign capital inflow will now fall between USD$18 billion and USD$22 billion , the expert commented at the Economic Forecast 2019, organized by Export Development Canada and Comexi .
According to the National Registry of Foreign Investment , 2009 was the ‘blankest year’ for foreign investment, with an inflow of barely USD$18.18 billion, whereas the foreign capital inflow rose to USD$22 billion and even $35 billion in subsequent years.
“We are anticipating a reduction of foreign investment. Our economy is not only being affected by an unstable global environment, but investors are also cautious about some of the new government’s most controversial decisions, such as the cancellation of the New International Airport in Texcoco, a partly built USD$13 billion new airport for Mexico City ."
“The problem,” he added “is that there are not enough resources in Mexico for infrastructure, which is why a project such as the airport in Texcoco usually takes years to complete. The government often uses financial products derived from pension funds to finance said projects, which require certainty on the part of Mexico’s administration to be functional
He added that, although there were some negative factors for this year’s forecast, “ there are also some really positive prospects, such as securing a primary GDP surplus of 1% . This is a sign that fiscal discipline will be maintained.” However, “the question remains as to whether the government will act accordingly.”
He estimated that Mexican economy would grow by 1.6% in 2019 and 2.3% next year , generating 400 thousand formal jobs this year and another 593 thousand in 2020 , though he foresaw a drop in public-private investment .
The Vice president and chief economist of Export Development Canada, Peter Hall , explained that there was heightened volatility and a complicated international landscape, not just for Mexico, but for all of the world’s economies.
He commented that there was an overall currency depreciation worldwide. In spite of this, the Mexican peso has managed to maintain its value thus far.
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