MexECON Blog

April Export Rise Confirmed

In a report on Thursday, the official statistics agency INEGI confirmed that Mexico's April merchandise trade balance swung to a seasonally-adjusted deficit of $123.1 million, compared with a revised surplus of $825.0 million in March.  According to the report, Mexico's exports fell 1.2% in April, while imports rose 2.2%.  On an unadjusted basis, Mexican exports in April were up 12.6% from the same month one year earlier, and imports were up 9.8%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and they were up 7.5% year-over-year in April.  The major manufacturing categories showing the strongest export growth were steel and metals, food and beverages, and autos and auto parts.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they jumped 35.1% year-over-year in April.  On a volume basis, Mexican crude oil exports totaled 1.223 million barrels per day, down 6.1% from April 2010.  On a value basis, however, the average export price of Mexican crude oil rose to $109.92 per barrel, up 47.8% year-over-year.  Finally, Mexican agriculture exports in April were up 39.3% from one year earlier.  Because of the extraordinary freezes that destroyed many vegetable crops in early February, some agricultural products posted large declines.  For example, exports of peppers were down 23.5%, while exports of cucumbers were down 8.4%.  At the same time, the freezes also drove prices higher, providing a boon for those with supply to sell (such as Terra Nova's greenhouse operations) and boosting the receipts from some farm categories.  The report showed, for example, that April tomato exports were up 42.7% year-over-year, rivaling the 58.9% gain in coffee exports.

Comment:   Mexico's trade deficit in April was quite modest, and the country has had a trade surplus in four of the last six months.  Despite this good performance, however, the April trade figures suggest the country's export boom may be starting to moderate.  Because the current export figures are now being compared with much higher base figures last year, the annual export gains of 20%, 30%, or even 40% or more that were common in the early stages of the recovery are probably now a thing of the past.  Just as important, exports have fallen on a seasonally adjusted basis in two of the last three months.  This softening is consistent with recent evidence that the world economic recovery has hit a potentially long lasting soft patch.  Unfortunately, domestic consumption and investment in Mexico may not yet be strong enough to make up for softer exports.  Although the most likely scenario is that Mexican economic growth will merely moderate, there is an increasing risk that Mexican growth could slow more dramatically.

Patrick Fearon, CFA
Vice President, Fund Management

        Mexico's Merchandise Trade Balance
           Seasonally Adjusted, Million US$
                            Source:  INEGI
Exports 1104 Revised

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