Progress of FDI must be interpreted with caution: CEESP

The Business Coordinating Council (CCE) recommended “caution” and not generate “mirages” in the face of the growth of foreign direct investment and the positive results of the Mexican economy, because these do not respond to the solidity of productive activity or fresh capital but rather to business reinvestment.

Based on preliminary figures, the flow of Foreign Direct Investment (FDI) that entered the country accumulated 32,147 million dollars in the third quarter of the year. The figure was 29.5% higher than the preliminary figure for this period last year and 13% higher than the corrected amount for the same period. It was even 3% higher than the total flow of all of 2021.

“The FDI figures for the year have been favorable in general. However, they must also be taken with caution. There were operations that did not represent greater productive capital”, warned the Center for Economic Studies of the Private Sector (CEESP).

In its weekly analysis, the private body affiliated with the CCE pointed out that the situation forces us to take the relatively favorable results of the annual growth of the economy with caution since they result from a comparison with respect to particularly low levels of last year.

“(The results) largely respond to an arithmetic effect, rather than a solid rebound in productive activity; this can generate a wrong vision of the evolution of the economy, ”he pointed out.

He said that the economic activity released by the INEGI, specifically in its annual comparison, has shown important and somewhat surprising advances, since most analysts expected a slowdown in the second half of the year.

The annual growth of the GDP in the third quarter was 4.3% when the forecast of the specialists anticipated 2.5 percent. The timely indicator of economic activity (IOAE) estimates that in October economic activity grew 5 percent.

The CEESP commented that expectations have been corrected upwards, in such a way that the growth forecast of analysts for the year is already located at around 2.5%, and it will surely continue to rise -it should be noted that just in August it was expected that was less than 2 percent.

“With this performance, it has finally been possible to recover the fall attributable to the pandemic, although it remains slightly below its level in the third quarter of 2018. This is far from being a commendable performance,” the private body said.

While it took the United States four quarters to recover what was lost due to the pandemic, it took Mexico 10. “The country’s recovery has been slower than in most countries,” he said.

For his part, he warned that inflation is increasing in the underlying price indicator, which is worrying. In the first half of November it increased at an annual rate of 8.66%, the highest since the second half of August 2000.

lilia.gonzalez@eleconomista.mx