Mexico City.- Unlike any other country and despite high interest rates, Mexico is experiencing unusual growth in demand and granting of bank credit to companies due to nearshoring.
An international comparison by the Bank of Mexico (Banxico) that includes both advanced and emerging economies shows that the outstanding balance of commercial banking credit to companies in Mexico grew by 11.19 percent annually as of the end of December 2023.
The figure for commercial bank credit balances to companies, which includes new and existing loans, is well above that recorded in other countries.
Commercial bank lending to businesses in the United States grew by just 1.09 percent annually in December 2023, while Canada posted a negative figure of -1.43 percent and Brazil grew by just 1.88 percent, to name a few examples.
Chile had a negative variation of -0.37 percent, England -1.92 percent and the euro zone -0.08 percent, reflecting the Banxico comparison built with information from the central banks of the countries.
“It is growing more in Mexico than in other countries, I think it is because there is a structural change that other countries are not experiencing, which is nearshoring,” said Gabriel Casillas, chief economist for Latin America at Barclays.
He explained that the investment linked to nearshoring is not foreign, but rather from Mexican companies that are developing industrial parks.
“Investment in construction, especially in non-residential construction, has grown enormously. Last year it grew like never before,” Casillas said in an interview.
The demand for bank financing to meet the nearshoring movement is also reflected in the granting of credit to real estate services and property leasing companies, which are the ones that develop industrial parks for companies to land.
Banxico’s Monetary Aggregates and Financial Activity report for May reveals that credit to real estate service companies and personal property rental companies grew 4.5 percent in real terms annually, after also reporting a real annual increase of 6.3 percent in April.
Among the companies coming to Mexico are car and auto parts manufacturers, aerospace manufacturers, medical equipment manufacturers, electric motors manufacturers and basic high-tech products such as chips, Barclays said.
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