Mexico Posts Higher-Than-Expected 4Q Current Account Deficit

Mexico reported current account deficits for the fourth quarter and for the whole of 2012 that were greater than expected by economists and policy makers.

The current account deficit, the broadest measure of trade in goods and services, was $6.49 billion in the fourth quarter and $9.25 billion for last year, according to a report posted by the central bank on its website today.

Economists had forecast a fourth-quarter deficit of $4.35 billion, according to the median estimate of seven analysts surveyed by Bloomberg. The central bank had estimated in a Feb. 13 report that the current account deficit for 2012 would be $7 billion, or 0.6 percent of gross domestic product, and swell to $17.3 billion this year, saying future deficits will be “moderate” and “completely financeable.”

While 2012 foreign direct investment figures fell to $12.7 billion from $21.5 billion in 2011, portfolio inflows rose to $80.2 billion last year from $40.6 billion in 2011, according to today’s report.

“The nation’s receiving an extremely large quantity of external resources both due to global liquidity conditions and because of conditions in Mexico,” Rafael Camarena, an economist at Grupo Financiero Santander Mexico SAB, said in a telephone interview from Mexico City. “There’s a great confidence on the part of investors in the financial market to buy Mexican bonds and stocks.”

Portfolio inflows in the fourth quarter were at record highs of $19.8 billion, Alberto Ramos, an economist at Goldman Sachs Group Inc., wrote in a research note today.

Mexicans invested $25.6 billion abroad, more than double the $12.1 billion they invested in 2011, and investment abroad exceeded FDI in Latin America’s second-largest economy for the first time since at least 2001.

The fourth quarter’s current account deficit widened from a revised $941 million shortfall in the third quarter and resulted from deficits of $5.63 billion in goods and services and $6.03 billion in royalties. These deficits were partially offset by a $5.17 billion surplus in the balance of transfers, according to today’s report.

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