MexECON Blog

April Export Rise Confirmed

In a report released earlier this week, the government confirmed that Mexico's April merchandise trade balance improved to a seasonally-adjusted surplus of $274 million.  Prior to that, the balance had been in deficit for three straight months.  In April, exports rose a seasonally-adjusted 6.2%, after a gain of 3.6% in March.  Imports rose 2.7%, after a rise of 5.2% in the previous month.  On an unadjusted basis, Mexican exports in April were up a very strong 43.2% from the same month one year earlier, while imports were up 44.0%.  Mexico's manufactured exports are particularly important because they make up the vast majority of the country's sales abroad.  In April, they were up 39.9% year-over-year, with the increase driven mostly by higher foreign sales of metal products, industrial equipment, and autos.  Petroleum products are the second most important category of Mexico's exports, and they rose 73.3% year-over-year.  On a volume basis, Mexico's petroleum exports again bucked their recent trend by rising to 1.302 million barrels per day.  Prices were almost twice as high as one year earlier.  Finally, Mexico's agriculture exports rose 24.3% year-over-year in April.  That rise was driven in large part by an 89.4% rise in the value of tomato exports, a 52.2% rise in legume exports, and a 33.7% rise in miscellaneous fruit exports. 

Comment:  Mexico has now had a trade surplus in three of the last seven months.  While that may not sound so impressive against the almost constant surpluses for China and some other large developing countries, it is impressive for Mexico.  The country runs trade deficits more often than not, in large part because it relies heavily on imported intermediate goods and, to a lesser extent, on imported raw materials.  Therefore, increases in Mexican exports are often offset by purchases abroad.  Inventory rebuilding and increased corporate and consumer demand in the United States continue to boost Mexican exports, and the country's industrial sector is now in a strong recovery.  Risks remain, and they have probably even increased in recent weeks as global financial markets once again focus on the risk of debt defaults in Europe.  Nevertheless, the recent positive trends in Mexico still look more likely to continue than to falter.

Patrick Fearon, CFA
Vice President, Fund Management

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