MexECON Blog

Trade Deficit Widens Again in April

Mexico's April merchandise trade deficit widened to a seasonally-adjusted $899.5 million, after revised deficits of $368.5 million in March and $666.7 million in February.  According to the report, the value of Mexican exports fell in April to $31.116 billion, the lowest level in three months.  Sales abroad during April were down 2.2%, erasing their 2.1% gain in March.  Imports in April fell to $32.015 billion, but that was only a slight 0.5% decrease, and it was not enough to erase the import rise in the previous month.  On an unadjusted basis, April exports were up 6.4% from the same month one year earlier, while imports were up 11.8%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in April, they were up 6.8% year-over-year.  The major manufactured exports showing the biggest increases were professional and scientific equipment, food and beverages, and rubber and plastics.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were down 1.7% year-over-year in April.  Within this category, Mexican crude oil exports totaled 1.275 million barrels per day, up 2.6% from April 2012.  However, the average export price for Mexican crude fell to $99.64 per barrel, down 7.8% from one year earlier.  Finally, Mexican agriculture exports in April were up 16.5% year-over-year.  Among the agricultural products showing the best performances, cucumber exports were up 79.3%, onion and garlic exports were up 56.5%, and pepper exports were up 38.1%.  Among the agricultural products showing the worst performances, frozen shrimp exports were down 26.0%, cattle exports were down 37.5%, and coffee exports were down 45.3%.

The report was released Monday by the official statistics agency INEGI.

Comment:  The Mexican economy is rebounding from its soft spot at the turn of the year, but Monday's trade figures are a reminder that the improvement is tentative and incomplete.  For example, the most recent trend in exports is only slightly positive.  Manufacturing output is growing, but only modestly.  Construction activity is finally increasing again, but that is largely offset by continued weakness in consumer spending.  What the Mexican economy really needs now is a significant acceleration in U.S. demand and more economic reforms to free up the economy and encourage investors.  Unfortunately, those developments are unfolding relatively slowly.  The recent correction in the Mexican stock market and the pullback in the value of the peso could therefore continue for a while yet.

Patrick Fearon, CFA
Vice President, Fund Management

Trade Balance 1304

Exports 1304

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