Record Remittances To Keep Mexico's Current Account Deficit Modest, Despite Wide Trade Deficit   


  • Fitch modestly revised its forecast for Mexico’s 2022 current account deficit from 0.9% of GDP to 0.7%, with the expectation that strong remittance inflows will offset a wider goods and services trade deficit.
  • In 2023, the current account deficit will widen slightly, to 0.8%, as a slowdown in remittances, driven by weaker growth in the US, outweighs the impact of a slightly narrower goods and services trade deficit.
  • These projected current account deficits are notably narrower than the 1.6% of GDP averaged in the decade before the pandemic, posing little risk to Mexico’s external position.
  • Importantly, the Agency does not foresee a major risk to Mexico’s external account stability, given modest deficits and stable stock of reserves; however, a dispute settlement consultation between Mexico, the US and Canada is a downside risk to exports in the medium term.

(Source: Fitch Solutions)