Banxico's Projection on Nearshoring in Mexico: Opportunities and Challenges Between 2026 and 2030
05:05 13/09/2024 - PesoMXN.com
Nearshoring has emerged as a significant opportunity to boost the Mexican economy, although the real effects are still to be defined. According to the Bank of Mexico (Banxico), this new phase of investment is expected to have its greatest impact on our country between 2026 and 2030. This trend arises in response to the need to relocate operations closer to consumer markets, a movement that gained momentum after the pandemic. In the Regional Economies Report for the period from April to June 2024, it is revealed that 41.3% of the companies surveyed by Banxico believe the largest benefits from reshoring will occur during that time frame. Furthermore, most business owners are confident that this trend will generate significant growth in the coming years. “The business sentiment continues to project that this process will bring greater benefits in the future, and that fostering a favorable investment environment is crucial to taking advantage of this expansion opportunity,” says the central bank's report.
Although the future looks promising, 31.6% of companies believe that the benefits of nearshoring will start to become evident in 2025, while 11.2% anticipate that the effects will already be present in 2024. Over the past year, 12.9% of companies reported experiencing direct benefits from this trend, which marks a significant increase compared to the 9.3% from the previous period (July 2022 to June 2023). The northern and central-northern areas of the country have been the most benefited by this dynamic, indicating a concentration of opportunities in these regions. However, the rise of nearshoring faces several challenges. Among the risks mentioned by business owners are the degradation of public safety, persistent inflation, and the threat of adverse climate phenomena. “We consulted with business owners about which factors they believe drive reshoring and what challenges need to be addressed, considering Mexico's geographical advantage of being close to the United States and the trade agreements we have,” noted Alejandrina Salcedo, director of Economic Research at Banxico. Additionally, the recent approval of judicial reforms in Mexico has raised concerns about the rule of law. Banxico has indicated that it will evaluate how these reforms impact ensuring an environment that encourages investment.
In conclusion, nearshoring could be a pathway to energizing the Mexican economy, but it is essential for the government and the private sector to work together to address the mentioned challenges and create a more stable and predictable environment that attracts investments. Effective collaboration between both parties will not only benefit businesses but also contribute to the sustainable economic growth of our country in the long term.
