5.5 billion dollars leave Mexico due to a loss of confidence.

As of March 5.5 billion dollars in deposits, currencies, loans, and investment portfolios moved outside of Mexico.

MEXICO (BANXICO) – The assets of Mexicans abroad increased by 5.5 billion dollars during the first quarter of 2020, according to information from the Bank of Mexico (Banxico). The most considerable amount of resources deposited outside the country for a similar period since 2018.

The assets that nationals keep outside Mexico were almost five times more than the 1,91 billion dollars reported in the fourth quarter and higher against $4,726 billion a year ago. Resources include bank deposits, currencies, and supplier credit.

In presenting the balance of payments to the first quarter, the Banxico noted that global financial conditions were affected by the spread of Covid-19 during that period, which caused a recomposition of investors. It is emphasized that the virus and measures to prevent its transmission have significantly affected global economic activity.

BANXICO noted that the latest global expectations incorporate a sharp drop in productive activity in the first half of 2020, followed by a recovery that would become more evident during 2021.

However, the Bank of Mexico warned that these forecasts are subject to high uncertainty since the duration and depth of the impact of the health crisis on global activity are still unknown. There are doubts about the pace of recovery of global demand and market developments.

Despite this, the central bank reported that in the first quarter of this year, Mexico continued to attract resources through direct and portfolio investment. Nevertheless, it was a lower amount, since direct investment went from 11,342 billion dollars in the first quarter of 2019 to 9,61 billion during the same period of 2020.

The portfolio was also reduced, from 8.484 billion dollars last year to 3.147 billion this year. Also, an inflow of resources of 9.297 billion dollars was reported for remittances between January and March 2020.

This departure is because they anticipate that the country will lose its investment-grade next year. In March and April, the three major rating agencies, Moody’s, Standard & Poor’s, and Fitch, downgraded the notes of Mexico and Pemex.

The first two did so with a negative outlook, which is a warning that they may downgrade again in the following months. At the same time, Fitch left Mexico just one step away from losing the investment grade.

According to the director-general of Bursamétrica Casa de Bolsa, when rating agencies remove the investment grade, capital outflow becomes a stampede.

Mexico’s checking account.
The Bank of Mexico announced that the current account had a deficit of 982 million dollars, equivalent to 0.4% of gross domestic product (GDP) during the first three months of the year.

The negative balance was less than the same period of 2019, when 11,141 billion dollars were reported, which was equivalent to 3.6% of the economy’s size, showed in the document that accounts for all economic transactions in Mexico.

The central bank report detailed that there were fewer imports of goods, with a value of 104,912 billion dollars, compared to 109,868 billion a year ago.