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Mexico’s Balance of Payments in the Third Quarter of 2022

The Bank of Mexico (Banxico) released this Monday the results of Mexico‘s Balance of Payments in the Third Quarter of 2022.

First of all, in the third quarter of 2022, the current account registered a deficit of 5.505 billion dollars.

At the same time, the capital account was in deficit by 53 million dollars.

Meanwhile, net indebtedness in Mexico’s financial account to the rest of the world implied an inflow of resources of 5.998 billion dollars, including an increase in reserve assets of 698 million dollars.

Balanza de Pagos (Millones de dólares).

The errors and omissions item showed a negative flow of US$441 million.

During the third quarter of the year, world economic activity showed heterogeneity among countries.

Although a moderate recovery with respect to the previous quarter is expected, mainly reflecting the reopening of economic activity in China and a rebound in growth in the United States, other economies reportedly showed a moderation in their pace of activity.

The evolution of the pandemic, particularly in China, as well as its possible impact on global economic activity and supply chains continued to contribute to maintaining an environment of high uncertainty.

Balance of Payments

In this context, in the July-September 2022 period, Mexico’s current account deficit stood at 1.6% of GDP, compared to 1.4% of GDP in the same period of 2021.

The moderate annual increase in the current account deficit originated mainly from widening deficits in the oil trade balance and the balance of services other than travel.

However, these widenings were partially offset by a smaller deficit in the non-oil trade balance and higher remittances and travel receipts.

During the reporting period, international financial markets experienced episodes of increased volatility and a tightening of financial conditions.

This reflected concerns associated with persistently high levels of global inflation, expectations of accelerated monetary tightening in major central banks, a global economic slowdown, and heightened geopolitical tensions around the world.

In this environment, during the period reported, the Mexican economy continued to attract resources through the financial account, mainly in direct investment and other investment.

Thus, the financial account recorded net indebtedness vis-à-vis the rest of the world.

 

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