The risky environment for investors prevents money injections into the country
Given the uncertainty about the management and development of the Covid-19 epidemic, as of April 9, capital outflows were reported for 117,305.7 million pesos (mp), a number that although “significant”, represented a decrease of 6.2% On an annual basis, this was reported to the Bank of Mexico (Banxico).
In its report, the central bank said that in the same period of the previous year, on April 8, 2020, capital flight reached 174,169.74 million pesos.
The above shows that a risky environment for investors prevails in the country, although the number was lower than the figure reported a year earlier in the middle of the pandemic, analysts who were consulted for 24 hours agreed.
Gabriela Seeler, director of economic and financial analysis at Banco Base, argued that capital flight shows risk aversion in the Mexican economy, a number that could continue to increase throughout this year.
He explained that the aforementioned exit exposes the decline in demand for government securities, which may be reflected in the interest rate hike, which he expects that by 2022 Banxico will increase the benchmark interest rate.
He added that the flow of capital abroad reveals negative effects of the state’s reform initiatives and proposals on the investment climate.
Meanwhile, Luis Andrade, a professor and researcher at La Salle University, said that when Banxico decided in its latest monetary policy report to keep the interest rate at 4%, this represented lower returns for investors, adding to it that the environment of insecurity continued regarding investment in Mexico. .
He added that although maintaining the interest rate at this level was a measure aimed at revitalizing domestic consumption in the country, it does not stop affecting the expectations of investors.
He explained that the flow of capital has a negative impact on the lives of Mexicans, as this also means the exit of companies and with it a decline in the labor market, so that the panorama does not contribute to the process of economic recovery in which country is.
Sentence or judgment on:
“Companies believe that good returns are not guaranteed at a 4% interest rate, in addition to fear of insecurity, because they better go with their capital to another economy.”
Luis Andrade is a professor and researcher at the University of La Salle