Mexico: Mild trade surplus reflects surge in exports
December 23, 2016
November’s trade report brought positive news. The trade balance incurred a surplus of USD 200 million, which marked the first surplus since March 2016. This led the 12-month trailing trade deficit to narrow slightly to USD 13.9 billion in November from USD 15.7 billion in the previous month. It is worth noting that the 12-month non-oil balance deficit is at its lowest since 1996, which confirms the great dive between the oil- and non-oil trade balances.
One encouraging result was the 11.1% year-on-year increase in exports in November, which marked a recovery from the 4.4% decrease in October and was the fastest pace of growth in four years. This suggests that the desired effects of the deterioration in the exchange rate of the peso against the U.S. dollar are kicking in.
Looking at the details, manufactured exports increased at a double-digit pace in November after a weak print in October and petroleum exports showed positive growth in the same month. Of note is that while figures from auto-sector associations show that exports to the U.S. remain strong, car exports to other latitudes also appear to be rising steadily, which should continue to underpin overall factory exports in the face of uncertainty regarding bilateral Mexico-U.S. ties.
Imports also brought upbeat news in November. They increased 5.1%, which contrasted a 5.9% contraction in October and marked the strongest growth since December 2014.
Author: Ricardo Aceves, Senior Economist