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Economy in Brief

 Mexico and Chile: Balances of Payments
by Louise Curley November 26, 2007

Mexico and Chile released third quarter data on their balances of payments today. Mexico's account balance continues to run between a little below and a little above -1% of GDP while that of Chile has been positive for the past three years and has ranged between 4-7% of GDP so far this year. The trends in the Current account as percentage of GDP are shown in the first chart.

In dollar terms, Mexico's current account was -$1768 million US in the third quarter of this year, an improvement over the deficits of $2844 and $2624 million in the second and first quarters of the year. In Chile, the current account was $1869 in the third quarter. The trend in the current account of each country is shown in the second chart. In both cases, but to a far greater degree in Mexico than in Chile, remittances from their nationals working abroad have been significant factors in reducing the current account balances. The third charts shows the relative magnitudes of net transfers in the two countries and the fourth chart shows the current account of each country excluding net transfers.

Another striking feature of Mexico's current account is the dominance of US trade. In the third quarter the total balance of trade in goods was-$2,926 million, but the balance of trade in goods with the US was a positive $20994 million as shown in the fifth chart.

Balances of Payments (Mil. US$)  Q3 07 Q2 07  Q1 07  2006 2005 2004
   Current Account  (% of   GDP)  4.52 3.67 7.05 3.59 1.02 2.16
   Current Account (Mil. US$) 1869 1497 2759 5256 1315 2074
   Net Transfer (Mil. US$) 905 589 589 3357 1791 1072
   Current Account ex Net Transfers  964 782 2170 1899 -476 1003
   Current Account (% of GDP)   -0.78 -1.30 -1.22 -0.22 -0.70 -0.95
   Current Account (Mil. US$) -1768 -2844 -2624 -1928 -5179 -6576
   Net Transfer (Mil. US$) 6091 5934 6268 24127 20736 17162
   Current Account ex Net Transfers  -8859 -8778 -8892 -26055 -25915 -23738
  Balance on Trade in Goods  -2926 -3083 -3049 -6242 -7655 -8755
  Balance on Trade in Goods with USA 20994 19776 19624 81466 65019 53698
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