Nearshoring to Mexico fuels economic growth and multiplying effects, Santander reports

Banco Santander has highlighted that the process of relocation, known as “nearshoring,” to Mexico by certain companies is generating a significant “multiplier effect” and serving as an accelerator of economic growth.

During the presentation of Santander’s “Nearshoring Data Monitor,” Osvaldo D’Imperio, the executive director of Global Transaction Banking Mexico, revealed that corporate banking participated in projects worth over US$10 billion throughout 2022.

D’Imperio further explained that in 2023 alone, Santander has already announced projects of the same magnitude from over 15 clients in four sectors: manufacturing, mining, construction, and transportation.

This demonstrates the power of nearshoring.

Each company engaged in nearshoring projects serves an average of 50 clients and requires 150 suppliers, primarily consisting of small and medium-sized companies, resulting in a multiplier effect along the value chain.

Moreover, this trend offers significant benefits to small and medium-sized enterprises, as they can establish connections with larger companies entering their regions to access the U.S. market.

According to Santander’s estimations, the relocation of investments could potentially lead to an additional 8% growth in Mexico’s Gross Domestic Product (GDP) over the next six years.

Mexico, the second-largest economy in Latin America after Brazil, experienced a growth rate of 3.0% in 2022, according to revised official figures.

The Ministry of Finance of the Mexican government estimates that the relocation of value chains has the potential to raise local economic growth by up to 1.2 percentage points within the next four years.