Weekly Report - 2 March 2004

INVESTMENT | Talking up the slump in FDI. Last year the inflow of foreign direct investment (FDI) to Mexico fell by 25.7%, to US$10.7bn, the lowest level in seven years. As part of the Fox administration's current effort to persuade Mexicans that the glass is half-full rather than half-empty, the economy ministry has been highlighting that the FDI figures don't look so bad when seen in an international context. Last year's inflow, it notes, was the highest in Latin America, and marked the second time in three years in which Mexico overtook Brazil. In the broader developing world, it says, only two jurisdictions attracted more FDI than Mexico: mainland China (US$57bn) and Hong Kong (US$14.3bn).

Of all the FDI brackets last year, the one which shrank the most was that of new investments (-64%), which accounted for a quarter of the total inflow.

Central bank governor Guillermo Ortiz doesn't share the government's sanguine approach: he says the loss of investments over the past few years is worrying, and that it is necessary to increase strategic public investment in order to encourage private investment.

EMPLOYMENT | Job losses in industry confirmed. Inegi's latest figures show that employment in manufacturing last year shrank by 3.9% — with the December total standing 4.1% lower than a year earlier. The data contain two features that do not bode well for Mexican productivity: the number of hours worked last year in manufacturing fell slightly more than the number of jobs lost, while average pay increased. In the maquila (assembly) subsector, employment last year contracted by only 0.8%, but the figures showed up the price paid for keeping one's job: more hours worked and a fall in average pay.