Mexico CityThe relocation of production continues to have a positive impact on companies in Mexico. Companies reported that they have benefited from this process in the last year, whether because they registered increases in production, sales or investment, said the Bank of Mexico (BdeM).
During the presentation of the “Report on Regional Economies, April-June 2024,” Alejandrina Salcedo Cisneros, general director of economic research at the BdeM, revealed that 12.9 percent of companies have benefited during the period from July 2023 to June 2024, a higher level than the 9.3 percent of companies in the period from July 2022 to June 2023.
He nearshoring or reshoring (a strategy in which companies benefit from moving supply chains to locations with greater proximity to end-consumer markets) is underway and has continued to advance.
The BdeM specialist explained that a new survey that they are publishing confirms this message about the relocation process. While a second message is that relocation is widespread among regions and economic sectors.
The northern region stands out the most, with 16.9 percent of companies reporting profits; followed by the central north, with 13.2 percent; and the central and southern parts of the country, with 11.4 and 7.8 percent, all of which have reported increases in the last year.
By sector, Salcedo noted, 16.6 percent of the companies surveyed in the total manufacturing sector have benefited from relocation, while 21.1 percent have benefited from relocation in subsectors with greater integration into global value chains.
“Reinvestment is part of the relocation process, since these are companies that are already located in Mexico and are deciding to maintain their profits here and have a greater investment and continue participating in this process. At the same time, most of the companies that are benefiting from relocation are Mexican companies. We do not necessarily have to see everything in the data on foreign direct investment (FDI) and all this benefit of relocation and we can see it in a generalized way in areas of the country and sectors of the benefits of relocation,” said the general director of economic research at the BdeM.
What is certain, he added, is that relocation is a process that we must consider will take time to materialize; to a greater extent, the companies that responded to the central bank’s survey foresee that the relocation process may occur later and, in fact, a good proportion expect the relocation process to occur between 2026-2030. This does not mean that all investment figures will be recorded from now on, but that it must be followed up gradually.
Regional activity
The Bank of Mexico estimated that economic activity experienced sluggishness in all regions during the second quarter of 2024. The South would continue to be at relatively higher levels than those observed before the pandemic, compared to the rest of the regions.
Construction spending continued to decline in the north and south, as a result of a fall in its public component, while its private component grew. In contrast, there was an increase in activity in the central regions due to an expansion of public works, and of private works in the center.
In the reference period, manufacturing is believed to have continued to contract in the north and central north, while it is believed to have expanded in the centre and south. In all of them, the level of activity is believed to be below that observed in the second quarter of 2023.
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– 2024-09-21 13:59:03
