MEXICO CITY May 24 A healthy boost in foreign
direct investment in the first quarter underscored confidence in
Latin America's No. 2 economy even as investment flows into the
country's stocks and bonds moderated, central bank data showed
Foreign direct investment reached $4.99 billion in the first
quarter after touching negative territory in the fourth quarter
of 2012, the first time since the data collection began in 1995.
The lionshare of the direct investment went into the
manufacturing sector and came from the United States, which
receives about 80 percent of Mexican exports.
"There is a huge surplus in the financial account, which is
savings from abroad coming into the Mexican economy," said
Rafael Camarena, an economist at Santander in Mexico City.
But foreign inflows into other Mexican assets fell to $13.9
billion in the first quarter, down from $24.65 billion in the
fourth quarter, with flows into Mexican stocks and corporate
debt dipping to $749 million from $5.61 billion reported at the
end of 2012.
Flows into peso-denominated bonds also declined, easing to
$9.34 billion from the $14.19 billion originally reported in the
Optimism about a raft of economic reforms promised by
President Enrique Pena Nieto helped boost the local peso in
recent months, though the currency has since fallen back on
slower growth and on Friday hit its lowest level since
Mexico's annual economic growth slumped in early 2013 to its
weakest in three years, prompting the government to cut growth
estimates and backing expectations of another interest rate cut.
Friday's data showed Mexico's current account deficit
narrowed to $5.53 billion in the first quarter, the equivalent
of 1.8 percent of gross domestic product, from a revised record
high of $7.023 billion deficit in the fourth quarter of 2012.
The quarterly balance of payments data, which provides a
snapshot of Mexico's dealings with the outside world, showed
that imports during the quarter again outweighed exports.
Gross reserves rose by $4.2 billion to a high of $171.3
billion, at the end of the first quarter and analysts said the
increase in the central bank's war chest from around $90 billion
in 2009 would help weather any global financial turmoil.
"The external accounts are at this juncture resilient enough
to deal with potentially large negative external shocks,"
Goldman Sachs economist Alberto Ramos said in a client note.