Investors and Capital flee Mexico under AMLO administration


As of November 10, foreign investors had liquidated 265.025 million pesos in debt instruments in the country; aversion is fueled by unclear economic policies toward productive sectors.

Foreign investors see much more risk of keeping their capital in Mexico than in the rest of the emerging countries, observed Jonathan Fortun, a senior economist at the Institute of International Finance (IIF).

“We have seen that there has been a reorganization, a change of context or economic policy in Mexico towards investors and it is what this divestment reflects,” he warned in an interview from Washington.

2021 will surely be the second consecutive year with historical capital outflows, which could hardly be stopped with an increase in the return offered to capitals, he observed.

Es tan grave la fuga de capitales? - Alto Nivel

Fortun refers to the capital outflow that Mexico has presented since the end of 2020 and until November 10 of this year, which according to figures from the Bank of Mexico amounts to 265.025 million pesos. A liquidation that represents 103.6% of the historical output that occurred in 2020, the year of the pandemic and the uncertainty due to global confinement.

The economist, who is the leader of the monthly analysis carried out by the IIF to identify emerging markets that are attracting more portfolio investments, the so-called “Capital Flows Tracker”, highlighted that the strategy to reverse this sentiment is not only in the differential rates.

It is clear that aversion is fueled by unclear economic policies and the government’s position against private initiative, he lamented.

“Unfortunately, the situation in Mexico today is very different from what we had seen last year when there was a more general aversion to all emerging countries due to uncertainty. We believe that this sentiment towards Mexico has to do with the lack of clarity of economic policies towards the productive sectors ”, he stated.

The government’s position on the energy issue, conservative fiscal policy and the issue of corruption resulted in a negative impact on the outlook.

Aversion in Mexico

Last year, foreign investors liquidated positions in Mexican securities worth 257,213 million pesos, an unprecedented figure that was explained by the uncertainty generated by the pandemic.

This year has been different, as capital returned to most emerging economies, but in the case of Mexico they continued to come out consistently, he said.

For the expert, the potential offered by Mexico is real due to its market size, geographic proximity with the United States and the trade agreement with its northern neighbors. But in the short and medium-term, the appeal faded.

In the particular case of Mexico, clarity to attract investment must be underlined and guided by clear and consistent messages from the central government.

Strong signal in economic policy

According to the expert, the inflation trend and the constitutional mandate of Banco de México will lead him to continue raising the rate. But he clarifies that they will not go much beyond the neutral rate, which implies a neutral stance as well.

This movement is implicit in the work of the central bank and in the trend followed by other monetary authorities in emerging countries. But in no way can it be taken as a point in favor of the investments remaining, he stated.

In Latin America, emerging central banks must signal the market about their stance on inflation and their stance on changes in US monetary policy.

Impulse abroad

The IIF economist stressed that after the pandemic, the recovery of the Mexican economy has been sustained by expansionary policies that come from abroad, specifically from the United States.

“To a certain extent, it is true that the issue of local policies is not felt and the perspective is that the Mexican economy has benefited from the luck of important fiscal stimuli that were granted in the United States to workers and they sent in the form of remittances. It was also supported by the higher demand for exports. And that little internal support does not escape the observation of investors either. “

The IIF is the largest association of financial institutions with global operations made up of investment funds, brokerages, private banks, rating agencies and insurance companies.


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