Growing External Account Vulnerabilities

We forecast Mexico's current account deficit to widen slightly to US$7.6bn in 2012, from US$7.3bn in 2011, as the goods trade deficit and a widening services trade deficit are unlikely to be counterbalanced by slower growth in remittances. The capital and financial account surplus should comfortably cover the current account deficit, however, will remain vulnerable to shocks given the growing proportion of shorter-term financial to total investment.

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