MexECON Blog

March Export Rise Confirmed

In a revised report, Mexico's March merchandise trade balance showed a surplus of $237 million, more than double the surplus in March 2009.  According to the report, March exports were up a very strong 39.0% year-over-year, while imports were up 38.6%.  Manufactured goods make up the vast majority of Mexico's exports, and they rose 35.6% year-over-year in March.  This increase was driven by higher foreign sales of plastics, metal products, industrial equipment, and autos.  Petroleum products are the second most important category of Mexican exports, and they rose 71.7% year-over-year.  The volume of Mexico's petroleum exports bucked its recent trend by rising to 1.267 million barrels per day, and prices were almost twice as high as one year earlier.  Finally, March agricultural exports rose 23.2% year-over-year.  The strongest agricultural exports included tomatoes, up 84.0%, and strawberries, up 66.3%.

Comment:  Mexico's recent trade surpluses have been impressive, especially since the country runs trade deficits more often than not.  Mexico relies heavily on imported intermediate goods and, to a lesser extent, on imported raw materials.  Therefore, increased exports are often offset with purchases from abroad.  Inventory rebuilding and some modest increase in corporate and consumer demand in the United States have boosted Mexican exports, and the country's industrial sector is now in a strong recovery.  Going forward, the recovery is likely to broaden and solidify, which should be a positive for Mexican asset prices and the peso. 

Patrick Fearon, CFA
Vice President, Fund Management

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