Economics: Imports and FDI stats cast doubt on recovery prospects clouded by internal policies and the global context
In previous issues of the Economic Outlook, we have analyzed the behavior of exports as an essential factor in economic growth perspectives, especially considering that in the second half of 2020 and the beginning of 2021 it was the only sector in the whole economy with any dynamism. To complement such assessments, this week we analyze how the recovery process is playing out based on two variables: imports, especially in the intermediate and capital segments due to their importance in production chains and investment overall; and FDI flows.
The most significant import recoveries in the manufacturing sector so far in 2021 are associated with products of key importance to other productive sectors and investments (such as steel, mining/metallurgy, the wood industry and plastics and rubber), and final consumer products (food, beverages and tobacco, metallic products for home use and equipment, and both electronic and electric apparatuses).
In addition to risks to the world economy associated with new outbreaks and the emergence of troubling Covid-19 variants, Mexico’s foreign trade is poised to run up against obstacles ranging from new rules from the Tax Authority that impose additional red tape and costs on the movement of goods, to ongoing trade disputes with the country’s main trading partners, and the prospects of a further ebbing of foreign direct investment. On that last point, the sectoral aspects are troubling given the decline in the level of FDI being channeled into manufacturing as well as transportation.
Now read on...
Register to sample a report