Current account deficit to decrease, FDI to increase
EH expects the trade balance surplus to increase in 2014. While imports should remain strong as domestic demand picks up, exports are likely to outperform imports as they will benefit from the recent MXN depreciation and from stronger growth of the US economy. Furthermore, some of the recently adopted reforms (notably labor market reform) are likely to begin bearing fruits this year by increasing Mexico’s export competitiveness. The current account deficit is expected to decline to 1.5% of GDP this year, while FDI inflows are likely to increase. Notably the energy sector and telecommunication sector are particularly likely to attract foreign capital due to the recent reforms. In the larger picture, recently adopted structural reforms will support FDI inflows in the forthcoming years thanks to increased confidence in the Mexican economy. External debt is expected to remain low (around 30% of GDP).