martes, 26 de febrero de 2013

Direct foreign investment: a disappointment

Last year, incoming FDI last year was a paltry US$12.66 billion, the lowest amount since 1996 and 41.1% less than in 2011. In part, the figure was so low because of the sale of shares by a financial institution with foreign ownership. The US$4.11 billion sale appears in the balance of payments as an outflow of FDI. Foreigners purchased US$3.94 billion of the shares sold, which then are accounted for as portfolio investment. If the sale of shares is excluded, FDI would have been US$3.20 billion in Q4 instead of the US$0.91 billion outflow actually registered and FDI for the year would have come to US$16.77 billion. It is worth noting that even excluding the sale of shares, last year’s FDI would have been on a par with that of 2009, which was the lowest since 1999.

Net FDI equals foreign direct investment (FDI) in Mexico minus FDI by Mexican companies.  Last year, net FDI was negative.  FDI by Mexican companies, one of the components of the assets held abroad account, was US$25.60 billion, double incoming FDI.  FDI will jump this year if US regulators approve AB InBev’s purchase of the 50% of Grupo Modelo shares it doesn’t yet own. Depending on the conditions imposed if the deal is permitted to go ahead, the FDI it represents could well be less than the US$20.1 billion announced at the end of June 2012.

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