Mexico: Trade balance swings to a deficit in July but the overall picture looks more promising
August 28, 2017
According to Mexico’s Statistical Institute, exports grew 8.0% year-on-year in July, reaching a total of USD 32.2 billion. The print, however, marked a deceleration from the 11.5% growth recorded in June. Mexico’s exports performance was underlined by the biggest category of exports—manufactured goods, of which automotive goods recorded solid annual growth of 13.2%. Oil exports, although a much smaller category than manufactured goods, had a notable growth rate of nearly 19.3%. In terms of particular export markets, non-oil exports to markets other than the U.S. grew at 10.5% in July, outpacing those to the U.S., which grew at 6.7%.
Imports grew 6.6% in July over the previous year, down from a 9.5% rise in June. July’s print reflected weak growth in imports of consumer goods and capital goods, which was consistent with slower domestic demand. In addition, a slow growth rate in oil imports contributed to July’s poorer performance. All in all, imports totaled USD 33.7 billion. Overall, Mexico had a USD 1.5 billion trade deficit in July, which contrasts the USD 0.1 billion trade surplus in June.
The 12-month trailing trade deficit narrowed to USD 8.7 billion—slightly below June’s USD 9.0 billion shortfall and the best reading in two years. This figure highlights the improving overall performance of trade in Mexico, particularly since mid-2016. Nevertheless, any sustained strength in the peso against the U.S. dollar could put a damper on exports and make Mexican goods less competitive in overseas markets.
Author: Edward Gardner, Economist