The willingness of businessmen to invest in Mexico has seen a significant decline of 13.9 percentage points from April to July 2024 compared to the same period in the previous year. This drop, driven by uncertainties surrounding potential changes to judicial reform, marks the lowest level of business confidence in the last five years, as reported by the Confederation of Employers of the Mexican Republic (Coparmex).
According to data from the DataCoparmex survey, only 39.6% of Coparmex members believe it is a good time to invest in Mexico. This figure represents a stark decline from the previous year and is comparable to the sentiment in 2020 when the country was grappling with the COVID-19 pandemic.
José Medina Mora Icaza, the president of Coparmex, attributed this downturn in business confidence to legal uncertainties stemming from the possibility of a qualified majority in the government. Such a majority could enable the ruling party and its allies to amend the Constitution without requiring input from other political forces.
“We attribute this legal uncertainty for investment to the possibility that there may be a qualified majority that allows the ruling party and its allies to modify the Constitution without the intervention of other political forces,” said Medina Mora Icaza during a recent press conference. He expressed concerns that this situation could lead to a regression reminiscent of the 1970s in Mexican democracy, where opposition forces had limited influence over constitutional amendments. “In particular, this qualified majority puts certainty at risk,” he added.
The impact of this uncertainty is felt unevenly across the country, with states such as Nayarit, Morelos, and Tabasco experiencing the lowest levels of investment. Meanwhile, regions like Yucatan, Puebla, and Aguascalientes, which had previously shown greater investment enthusiasm, are now witnessing the largest reductions in investment levels.
The decline in business confidence comes at a critical time for Mexico, as the nation seeks to recover from the economic disruptions caused by the pandemic. The government has been striving to attract foreign investment and promote economic growth, but the current political climate poses significant challenges.
Business leaders are urging the government to provide greater clarity and stability regarding the judicial reform process to restore confidence among investors. The need for a balanced approach that includes input from various political forces is seen as crucial to ensuring a stable and predictable business environment.