MexECON Blog

July Exports Rise 19.4 Percent YOY

In an initial estimate released last week, Mexico's July merchandise trade deficit widened to a seasonally-adjusted $364.4 million, after revised deficits of $218.9 million in June and $304.4 million in May.  According to the report, from the official statistics agency INEGI, Mexican exports fell 0.1% in July, following revised increases of 1.2% in June and 3.0% in May.  Imports grew 0.4%, after increases of 0.9% in June and 3.6% in May.  On an unadjusted basis, Mexican exports in July were up 19.4% from the same month one year earlier, while imports were up 19.2%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in July, they were up 16.8% year-over-year.  The major manufacturing categories showing the strongest export growth were steel and metals, autos and auto parts, and chemicals.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were up 32.2% year-over-year in July.  On a volume basis, Mexican crude oil exports totaled 1.223 million barrels per day, down 11.8% from July 2010.  On a value basis, the average export price of Mexican crude came in at $104.85 per barrel, up 53.0% from one year earlier.  Finally, Mexican agriculture exports in July were up 10.4% year-over-year.  Mexican coffee exports continued to boom, with an increase of 126.4% year-over-year.  Other agricultural products showing strong gains were fish and shellfish (up 67.1%), miscellaneous fruits (up 37.8%), and tomatoes (up 21.2%).

Comment:  Mexico's trade performance remains unusually strong, but export growth continues to moderate, and imports continue to grow.  The slowdown in manufacturing exports is particularly notable because it shows the Mexican economy is already feeling the impact of faltering demand in the United States and other key developed countries.  If the recent volatility in global financial markets saps confidence and leads to further retrenchment around the world, Mexican trade performance is likely to soften further.  It still looks like Mexican exports will continue to grow for the time being, especially now that the peso has retreated in the midst of the global financial panic, but there is an increasing risk that exports will slow more dramatically.

Patrick Fearon, CFA
Vice President, Fund Management

                       Mexico's Merchandise Trade Balance
                           Seasonally Adjusted, Million US$
                                            Source:  INEGI
Trade Balance 1107

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