Q: According to data from fDi Markets, Mexico was one of the few major countries that showed a sizeable increase in FDI projects last year. Why do you think this is?
A: It is about our prospects [for growth]. I think there is a momentum in overseas investment. I was in Davos [at the World Economic Forum], and we had some big announcements by companies such as PepsiCo, Nestlé, Cisco, as well as other important announcements of FDI coming into Mexico. And I think it’s because of the expectation of future growth.
That expectation is accurate… our reform process will accelerate that growth potential. In the past three years, Mexico has been a relatively slow-growing country. Our average [growth rate] has been only 4%. And the goal of these reforms is to really address the structural things, to remove the breaks on things such as finance, the cost of energy, access to IT and telecommunications, [access] to a global market, and, of course, education. So this process of transformation is creating opportunities for investment and jobs, and ultimately a more prosperous country.
Q: How much of an effort is being made to diversify your sources of FDI, to bring in other sources in addition to the US, and where do you see the most potential in terms of FDI?
A: I think the most interesting news in terms of FDI for Mexico comes from China. We have very little Chinese investment in Mexico, and China is a big supporter of capital. After China's president visited Mexico last year, there has been more conversation, some increased steps for attracting investment towards infrastructure and manufacturing from China.
Companies are increasingly interested in Mexico. Our largest European investor in Mexico is Germany, and soon an important group of UK CEOs will be visiting Mexico, primarily to look at FDI opportunities. We recently hosted an Italian delegation along with prime minister Enrico Letta, who was in Mexico, so we’re seeing diversification of foreign investment in Mexico, and that’s exactly what we want to do. The US will still be important – very important, perhaps our primary source of FDI – but we’re seeing good things in terms of growth and diversification.
Q: What is your view of the emerging market sell-off that is going on in global markets, and how well can Mexico withstand the storm?
A: Well if you look carefully at the data, [Mexico has been performing differently to other emerging markets]. With the peso, for example, in the past 13 months, our overall depreciation is 4%. Compare that with the Turkish lira, with its 30% depreciation, or even the Brazil real, which [depreciated] 16%. With credit default swaps – the yields of both dollar bonds or local currency bonds – the Mexican economy is faring much better than other emerging economies. We expect that to continue, and we expect that the 'stampede effect' that we saw recently will abate because risk aversion will abate.
Mexico has very strong fundamentals compared with other emerging markets. We have a low current account deficit, just above 1%, we have strong banks, stronger than Europe or the US, our debt-to-GDP ratio is low, we have a flexible currency and we have a good amount of insurance and other protections, so the fundamentals are good.
But beyond that, we have strong prospects of growth. Because of our reformist government, the transformations that are happening in Mexico, such as tax reforms and energy reforms, are creating an interest. We see a lot of companies that had not been in Mexico before coming to our country. We expect financial markets to react. Of course Mexico is still an emerging economy, a very open economy, both to trade and to investment, so it’s natural that we experience some volatility, but we’re in much better shape than many other emerging economies.