Capital Flight from Mexico up 1,147 Percent in Third Quarter

Photo: Financial Express


During the third trimester of 2021, portfolio investment in Mexico registered nearly $14.6 billion in capital flight, both foreign and national, representing a 1,147 percent increase compared to the $1.17 billion that left the country during the same period of 2020.

The 2021 third quarter figure is the largest capital exodus recorded for any quarter of a year since the first three months of 2009, the Central Bank of Mexico (Banxico) reported Friday, Nov. 26.

It is also the sixth consecutive quarter of net capital outflows, the longest period since the second quarter of 1986.

Gabriela Siller, director of economic and financial analysis at Banco Base, attributed the increase in capital flight to global uncertainty due to the pandemic, risk aversion over Mexican economic stability and adjustments in investment portfolios in anticipation of  an increase in U.S. interest rates.

Jorge Martínez, director of MG-Risk and professor at the Tec de Monterrey University, said that the perception of potential risk in Mexican investments is directly related to the economic policy of the current federal government, low economic growth and high inflation.

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