Economics: Robust remittance, tourism income and FDI numbers for 1Q22 while exports slowed
A higher petroleum deficit and a more pronounced shortfall in primary income sent Mexico’s current account deficit for the first quarter of 2023 nearly 2.0 billion dollars above that of 1Q22, at the same time as the primary income deficit swelled by close to 4 billion dollars.
Current account foreign currency inflows traded in the private market climbed significantly, in large part thanks to an 11.3% yoy rise in remittances in response to the continuing strength of the US job market, especially in the services segment, in which a significant percentage of persons of Mexican origin are employed. Another major contributor was tourism, as net dollar revenues from that source increased by 1.1 billion dollars yoy.
The non petroleum trade surplus more than tripled from 1Q22. However, it came in below that of 4Q22 due to the extent to which peso appreciation has fanned domestic demand for imported non petroleum consumer goods and contributed to a slowing of Mexico’s non petroleum exports, which in addition to the forex factor, reflects the gradual deceleration of US manufacturing. The export sector has shown signs of decelerating since the beginning of the year as US industrial production has remained stagnant while manufacturing in the same period fell moderately.
Foreign direct investment inflows have sustained their dynamism by rising 17.3% yoy after adjusting for the 6.9 billion dollar cash/equity transactions that were held between Univision and Televisa and by the Aeromexico airline restructuring with foreign capital. Most FDI corresponded to reinvestment of profits, which increased by almost 4 billion dollars, while new investments fell by nearly 50% after adjusting for the aforementioned atypical transactions.
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