Mexico's manufacturing production can grow 5% a year thanks to the boost that nearshoring will give it, according to a report by the firm Deloitte. Although nearshoring is in a very early stage, the phenomenon is evolving rapidly and leads to an expansion of manufacturing activities.

The relocation of manufacturing plants in Mexico could reconfigure the economy through the arrival of foreign investment and new and specialized jobs, according to the company's most recent report on its economic prospects for the country.

Of interest: Ramos Arizpe, an investment hub capturing 56% of Saltillo's industrial demand in Q3 2023

He highlighted that although manufacturing activity has slowed recently, it remains well above pre-pandemic levels (6% above 2019). On the other hand, private investment is recovering quickly with 18% annual growth in the first half of 2023, “after a long period of weakness.”

In addition to the forecast for the manufacturing sector, Deloitte considered that Mexico's exports can grow by up to an additional 50 billion dollars per year and that Foreign Direct Investment (FDI) would increase 10% each year.

It projected that all of these factors would add an additional 2.9 percentage points to GDP over the next five years.

However, he said that when observing the volume of FDI in the first half of 2023, of the total of 29,041 million dollars registered, only 7% corresponds to new investments, while almost 80% corresponds to reinvestments.

“While these numbers call into question whether new companies are moving to Mexico or not, we think this is happening because several of these nearshoring announcements are in their initial phase, and that the largest investment outlays will occur in the following years. ”he explained.

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On the other hand, he pointed out that the construction of industrial facilities in the country grew 19% annually in the first six months of 2023, exceeding the highest level reached in 2017.

The consulting firm said that although factors such as the current situation of nearshoring, higher real wages and the USMCA have driven growth in Mexico, the investments necessary to improve productivity remain a challenge.

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