Mexico posted its largest current account surplus on record and the first in nine years, lifted by robust foreign trade with the United States as President Donald Trump waged a bitter tariff dispute with China, official data showed on Friday.
In the second quarter, Mexico ran up a current account surplus of $5.143 billion, the biggest since current records began in 1980, and equivalent to 1.6% percent of gross domestic product (GDP), central bank figures showed.
Mexico has this year become the top trading partner of the United States thanks to Trump's protracted feud with Beijing. Mexico sends about 80% of its exports, much of which are goods such as cars and televisions, to the United States.
"Going forward, Mexico could potentially be one of the main beneficiaries of the trade-conflict between the U.S. and China and global manufacturers could set base in Mexico given the competitive unit labor costs and logistical proximity (to the United States)," said Goldman Sachs economist Alberto Ramos.
Trump on Friday lashed out at China again, pressuring U.S. firms to leave the country after Beijing unveiled retaliatory tariffs on $75 billion in U.S. goods, stoking fears the dispute will tip the global economy into recession.
The Mexican central bank data showed goods exports were worth almost $5 billion more than imports in the quarter, yielding the first such trade surplus in five years.
The current account is a broader measure of a country's foreign transactions encompassing trade, services and financial flows, including interest payments and income transfers.
Still, the data raised questions about the health of the Mexican economy, which stagnated in the second quarter after contracting during the January-March period.
The figures showed a sharp drop in non-oil imports, underscoring weakening Mexican private consumption, and helping to explain the record current account surplus, said Benito Berber, chief economist for Latin America at Natixis.
Ramos at Goldman Sachs said a competitive exchange rate and rising workers' remittances also contributed to the surplus.
The remittances, mostly coming from U.S.-based Mexican workers, rose to $9.403 billion in the second quarter, from $7.852 billion in the January to March period.
In addition, Ramos pointed out that there was concern about decelerating foreign direct investment flows and that Mexico's portfolio flows, which measure the buying and selling of securities, had turned negative.
Mexico posted a current account deficit of $21.996 billion for all of 2018. The second quarter surplus was the first since the April-June period of 2010, the central bank data showed.
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