Mexico Trade January 2017


Mexico: Trade deficit disappoints in January but details are more encouraging

February 27, 2017

The trade report for Mexico at the beginning of the year was somewhat disappointing. The trade balance incurred a USD 3.3 billion deficit in January after having been balanced in December. This led the 12-month trailing trade deficit to remain at December’s USD 13.1 billion in January. The result is unfortunate as the accumulated trade shortfall had been narrowing almost uninterruptedly since May 2016 and analysts had expected it to shrink further to USD 12.5 billion.

Nevertheless, the details provided more encouraging results. Exports totaled USD 27.5 billion in January, surging 11.4% over the same month last year (December: +6.6% year-on-year). The expansion was the fastest in more than four years and was propelled by a massive increase in petroleum exports and by a further expansion in shipments of manufacturing goods. Petroleum exports were supported by higher oil prices in January. The Mexican mix of oils averaged USD 45.4 per barrel in January, which was USD 2.60 higher than the previous month. Meanwhile, imports jumped 10.0%, pushing the value of imports to USD 30.8 billion in January. The increase came in well above the 4.1% rise seen in December and marked the strongest growth rate since December 2014.

Mexico and the U.S. traded USD 525 billion worth of goods last year, many of which were manufacturing goods. President Trump has vowed to move quickly to renegotiate NAFTA and is pushing U.S. manufacturers to relocate jobs to north of Mexico’s border. Although the U.S.’ exact goals for renegotiating NAFTA remain unclear, some analysts affirm that the U.S. will try to renegotiate parts of NAFTA, rather than ripping it up. As Benito Berber, Senior Latam Strategist at Nomura, states:

“There are strong arguments to believe the threat of completely abandoning NAFTA is unlikely to fully materialize. These arguments include the high level of integration between the US, Mexico and Canada in the supply chain for manufactured goods, that 40% of US imports from Mexico have US-content.”

Panelists surveyed for this month’s LatinFocus report expect exports to reach USD 383 billion in 2017, which will represent a 2.5% expansion compared to last year. Meanwhile, imports are expected to rebound and increase 2.4%, reaching USD 397 billion. For 2018, the panel expects exports and imports to rebound and increase 4.6% and 4.3%, respectively.

Author:, Senior Economist

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Mexico Trade Chart

Mexico Trade12m January 2017

Note: 12-month sum of trade balance in USD billion and annual variation of the 12-month sum of exports and imports in %.
Source: Mexico National Statistics Institute (INEGI)

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