Mexico: Merchandise trade data remains upbeat in February
March 27, 2018
On the back of robust factory and auto output in the United States, the merchandise trade balance swung to a USD 1.1 billion surplus in February from the record-high USD 4.4 billion deficit recorded in January. Most components showed strength in February and continue to point to a gradual economic turnaround early in the year on the back of robust growth in the United States and waning domestic headwinds.
Exports rose a healthy 12.3% from the same month of the previous year in February, coming in only marginally below the 12.5% expansion recorded in the previous month. Exports in February totaled USD 35.2 billion. The solid reading was the result of strong manufacturing exports, with auto exports in particular recording an outstanding 17.9% expansion in the month thanks to strong production levels in the United States (January: +9.0% year-on-year). That said, overall manufacturing export growth was unchanged at a robust 10.5% in February due to a moderate deceleration in non-auto manufacturing exports.
Meanwhile, import growth lost some steam in February, with non-oil consumer imports—a proxy for domestic private consumption—taking a breather. Other components, however, were quite encouraging. Non-oil intermediate imports—which are closely interlinked with manufacturing activity—recorded a solid 9.1% expansion in February, only somewhat below the 13.0% leap recorded in January. Capital imports, a proxy for investment, recorded an outsized 20.1% increase in February, topping the already upbeat 18.8% rise recorded in January. Overall import growth moderated to 11.7% in February from 14.1% in January, totaling USD 34.1 billion.
The 12-month trailing trade deficit narrowed to USD 11.5 billion in February from USD 11.8 billion in January, below the USD 11.8 billion deficit recorded in February 2017.
Mexico Trade Balance Forecast
Panelists surveyed for this month’s LatinFocus report expect exports to reach USD 432 billion in 2018, which would represent a 5.5% expansion compared to the previous year. Meanwhile, imports are expected to grow 5.2% and reach USD 442 billion. For 2019, the panel expects both exports and imports to expand 5.4%.
Author: David Ampudia, Economist