In a bid to quell investor jitters over its controversial judicial reforms, Mexico’s new president, Claudia Sheinbaum, announced on Tuesday that four foreign companies will invest approximately $20 billion in the Latin American nation next year. This announcement came on the same day that the International Monetary Fund (IMF) predicted a slowdown in growth for Mexico, the region’s second-largest economy, and expressed concerns about the uncertainties surrounding the judicial reforms.
President Sheinbaum touted these planned foreign investments in sectors like energy, tourism, and e-commerce after meeting with US business leaders in Mexico City. However, it remains unclear how much of this investment represents new capital. “At least four major investments of around $20 billion in our country were announced for 2025,” Sheinbaum told reporters. These investments, according to Economy Minister Marcelo Ebrard, are pledged by liquefied natural gas firm Mexico Pacific, e-commerce giant Amazon, cruise line operator Royal Caribbean, and oil and gas company Woodside Energy. While the confirmed total investment surpasses $20 billion, Ebrard suggested actual investments could exceed $30 billion by 2025.
Sheinbaum, who became Mexico’s first female president on October 1st, met with 240 business leaders on Tuesday, including representatives from the United States, Mexico’s primary trading partner. The United States and Canada have expressed apprehensions about the potential impact of these judicial reforms on trade relations. These reforms would make Mexico the first country in the world to elect all judges through popular vote. Seeking to dispel these anxieties, Sheinbaum asserted that the constitutional amendment “does not represent a problem for investment in Mexico.”
However, the IMF has expressed reservations about the reforms, highlighting “important uncertainties” surrounding contract enforcement and the rule of law. The IMF’s staff stated in a statement following their visit to Mexico, “It is critical that this reform be implemented in a clear and predictable way that ensures the independence and professionalism of the judiciary and strengthens the rule of law.” The organization also downgraded its economic growth forecast for Mexico to 1.5 percent for this year, down from its July prediction of 2.2 percent, citing the uncertainties surrounding the reforms.
The timing of the investment announcement and the IMF’s cautious outlook raise questions about the effectiveness of these investment pledges in calming investor anxieties. While the announced investments represent a significant sum, the actual impact on the Mexican economy remains unclear. Furthermore, the IMF’s concerns about the judicial reforms and their potential impact on the rule of law and business environment suggest that these investments might be viewed with a degree of skepticism by the international business community. Only time will tell whether these investments will materialize as promised and contribute to Mexico’s economic growth.