Mexico: Current account deficit widens amid recovering domestic demand
November 26, 2010
The current account registered a deficit of USD 1.8 billion in the third quarter, which was larger than the previous quarter's deficit of USD 0.6 billion, but smaller than the USD 3.6 billion deficit incurred in the same quarter last year. Moreover, the reading came in above market expectations, which had the current account deficit reaching USD 3.0 billion in the third quarter. The quarterly figure was mostly led by a widening of the trade balance deficit (Q2: USD 0.1 billion; Q3: USD 2.3 billion). Exports reached USD 75.5 billion, which represented a minor improvement over the previous quarter (Q2: USD 74.7 billion) while imports rose more markedly form USD 74.7 billion in the second quarter to USD 77.8 billion in the third quarter. Furthermore, a wider deficit in the services balance also contributed to the deterioration of the current account, as it increased from USD 2.7 billion in the second quarter to USD 3.0 billion in the third quarter. Yet, the widening deficit was partially offset by an improvement in the income balance deficit (Q2: USD 3.8 billion; Q3: USD 2.1 billion). Meanwhile, the transfers balance fell from a USD 5.9 billion surplus in the second quarter to a USD 5.6 billion surplus in the third quarter, driven almost entirely by lower remittances from workers abroad, which dropped to USD 5.5 billion (Q2: USD 5.8 billion). Owing to the moderate quarterly reading, the moving annual current account deficit shrank from USD 5.3 billion in the second quarter to USD 3.5 billion in the third quarter.