From January to March last, the country’s current account registered a deficit of 982 million dollars, a value of 91.2 percent lower than the same period of the previous year, according to information from Banco de México (Banxico). Read Profeco reports tuition drops of up to 25%
This amount represented 0.4 percent with respect to the size of the Mexican economy, measured by the Gross Domestic Product (GDP), 3.2 percentage points lower than the imbalance recorded in the first three months of last year.
The central bank explains that the annual decrease in the current account deficit in the first quarter of 2020 was mainly the result of an expansion of the non-oil merchandise balance surplus and a smaller deficit in the primary income balance, although Higher remittance income also contributed.
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The current account records the commercial relationship of goods and services of the Country with the exterior, as well as payments to capital factors from here to abroad and vice versa, in addition to transfers of resources such as family remittances.
The fact that the external imbalance is reduced makes the national economy less vulnerable to external shocks and contributes to the fact that the deficit can be financed because there are fewer needs for dollars for the economy. On the other hand, when the situation grows rapidly, the situation becomes more complicated.
In the case of the capital account, the deficit for the aforementioned period was $ 8 million.
There was a net indebtedness in the financial account that implied an entry of resources for $ 3.455 billion. This balance originated from net indebtedness of 9,161 million dollars for direct investment and 3,147 million in portfolio investment.
It also includes net loans to the rest of the world of one thousand 878 million dollars in the line of financial derivatives and 2 thousand 575 million in the heading of other investment; as well as an increase in reserve assets of 4.3 billion.
In this way, the line of errors and omissions exhibited a negative flow of $ 2.455 billion.
On the other hand, Banxico establishes that the global spread of Covid-19 caused a significant deterioration in global financial conditions in the period.
This caused a recomposition of the investors’ portfolios towards lower risk assets and the largest contraction in the record of holding assets in emerging economies, especially in fixed income instruments.
In the case of Mexico, although it was not exempt from these trends, in the first quarter of 2020 the Mexican economy continued to capture resources for direct investment and portfolio, so that the financial account presented net indebtedness.
Furthermore, the available information indicates that the Covid-19 pandemic and the measures taken to prevent its spread have considerably affected world economic activity, the central bank says.
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For this reason, he highlights, the most recent expectations for the world economy incorporate a sharp drop in productive activity in the first half of 2020, followed by a recovery that would become more evident during 2021.
These forecasts are subject to a high degree of uncertainty, since the duration and depth of the impact of the health crisis on global activity is still unknown, and there are doubts about the pace of recovery in world demand and developments. of the markets.
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