Current account deficit decreases 91%

Current account deficit decreases 91%

The central bank explains that the annual decline in the current account deficit in the first quarter of 2020 was primarily the result of a widening of the non-oil goods balance surplus and a smaller deficit in the primary income balance, although higher remittance revenue also contributed. In addition to transfers of wealth such as family remittances, the current account tracks the country’s trading relationship with the outside, as well as payments to capital considerations from here to abroad and vice versa.
The elimination of the external imbalance makes the national economy less vulnerable to external shocks, which leads to the fact that the deficit can be funded because the economy needs fewer dollars. On the other hand, the situation becomes more complicated as the situation grows rapidly.
In the financial account there was a net indebtedness that implied resource entry for $3,455 billion. The balance resulted from net indebtedness for direct investment of $9.161 million and indirect investment of $3.147 million. This also includes net loans of one thousand 878 million dollars in the financial debt line to the rest of the world and 2.575 million dollars in the other investment heading; as well as an rise in 4.3 billion reserve assets.
This caused investor portfolios to be recomposed to lower risk assets and the largest contraction recorded in holding assets from emerging economies , particularly in fixed-income instruments. In Mexico ‘s case, while not excluded from these patterns, the Mexican economy continued to collect capital for direct investment and portfolio in the first quarter of 2020, so that the financial statement showed net indebtedness. Moreover, the information available suggests that the Covid-19 pandemic and the steps taken to prevent its spread have greatly impacted world economic activity, the central bank says.