Mexico - September 2026

Mexico’s overall foreign direct investment (FDI) for the first half of 2026 hit an all-time high of nearly US$35bn, the economy ministry (SE) announced on 24 August. This was up by 2.1% year-on-year and contributed to an almost 90% leap since 2021. However, the apparently positive figure conceals a worrying trend: the vast bulk of Mexico’s FDI (88.5%) consists of reinvested earnings, while new investments are actually falling at an alarming rate.

Amid a complex investment climate in Mexico – not least because of the uncertainty surrounding the status of the US-Mexico-Canada Agreement (USMCA) – fresh investments dropped by 42% to US$2.7bn in the first half of 2026, down from US$4.7bn in the same period last year. The impact of the decision by the US administration to subject the USMCA trade pact to annual reviews [EB-26-08], together with Mexico’s sweeping 2024 judicial reform, which has fuelled concerns about the rule of law, has caused many businesses to think twice about building new plants in the country.

The prospect of regular reviews of the USMCA – which has huge influence on Mexico’s economy given that around 80% of the country’s exports are sent to the US – is now likely to become a key factor in determining the success of nearshoring investment in Mexico, as foreign executives take a “wait-and-see” approach until the fate of the trade pact becomes clearer. 

Not only has there been an abrupt fall in Mexico’s greenfield investment, but there is evidence that some companies already in Mexico are actively thinking about relocating elsewhere. According to Reuters, more than a dozen executives in sectors including auto parts have said they are reconsidering their investment plans, with some planning to exit Mexico altogether and set up in countries in ⁠Asia, such as Vietnam.

On the bright side, US demand for artificial intelligence (AI) infrastructure bolstered activity in Mexico’s manufacturing industry, which remains the main destination of FDI. Manufacturing received 38.6% of the total, or more than US$13bn, up by 9.3%, largely driven by factories making computer equipment, communications equipment, and electronic components. Indeed, the US remains the main source of FDI in Mexico, sending US$16.9bn, or almost half of the total. Spain is the second-largest source, but still much lower at just under US$5bn, followed by Canada with US$1.7bn, and Australia and Germany close behind.

Analysts have warned that falling new investment is a significant threat to Mexico’s economic growth, which turned positive in the second quarter of the year, growing by its fastest pace in more than four years at 1.4%, after a contraction in the first quarter. An increase in AI-related exports to the US contributed to this performance – but even this apparently positive development has its downsides. It has helped to push the US trade deficit with Mexico to record levels, an issue that has been one of the main stumbling blocks in talks to renew the USMCA as Trump strives to cut trade imbalances. While Mexico’s central bank expects exports to keep growing, it noted in its August quarterly report: “The lack of a definitive resolution regarding [the USMCA’s] future remains an adverse factor for investment decisions.”

Even so, the appreciation of the Mexican peso could represent an opportunity to attract greater FDI flows, argue economists. So far this year, the peso has recovered significantly against the US dollar, managing to strengthen below 17 pesos to the US dollar in August and ranking as one of the best-performing emerging market currencies.

“FDI, in particular greenfield investment, has been underwhelming and the outlook is impaired by the continuation of state-centred inward-looking policies (in oil & gas, electricity, and mining), the perception that some constitutional changes led to institutional quality erosion, and uncertainty around the outcome of the USMCA review,” wrote Alberto Ramos, an economist at Goldman Sachs, in a note to clients. He added that FDI reached 2.4% of GDP in 2025 – slightly down from 2.5% of GDP in 2024 – while on a 12-month rolling basis FDI stands at a more moderate 2.1% of GDP. In general, Ramos warned that FDI – together with portfolio investments in stocks and bonds – could be further weakened by a “confidence or policy shock”, which represents a greater threat to Mexico’s balance of payments than a major widening of the current account deficit. 

In a related development that could help to strengthen the legal framework surrounding FDI, the Mexican government moved to create a national security review regime enabling it to block acquisitions of local companies on national security grounds. Ahead of the fourth round of joint review of the USMCA between Mexico and the US in September, the government submitted a long-awaited bill to congress on 28 August to amend the foreign investment law, as part of broader efforts to strengthen foreign investment screening. These include a memorandum of intent with the US to establish a bilateral working group on foreign investment reviews.