Itaú BBA - MEXICO – Another large trade surplus in September

Macro Latam

< Back

MEXICO – Another large trade surplus in September

October 27, 2020

The improvement in the trade balance is mainly supported by manufacturing exports

September’s trade surplus improved further supported by the non-energy balance. The monthly trade balance posted a surplus of USD 4.4 billion in September, close to our forecast of USD 4.8 billion surplus and above median market expectations (USD 3.6 billion surplus, as per Bloomberg) – taking the 12-month rolling trade balance to a surplus of USD 22.2 billion in September (from a surplus of USD 17.6 billion in August). The improvement in the 12-month trade balance was driven by the non-energy balance which stood at surplus of USD 37.8 billion in September (from USD 33.8 billion in August), while the non-energy balance stood broadly stable at a deficit of USD 15.6 billion (from a deficit of USD 16.2 billion). At the margin, using 3-month annualized seasonally adjusted figures, the trade balance stood at a surplus of USD 73.6 billion in 3Q20 (from a deficit of USD 16.1 billion in 2Q20), with the energy trade deficit broadly stable at USD 9.9 billion in 3Q20 (from a deficit of USD -9.5 billion in 2Q20), while the non-energy balance improved to a surplus of USD 83.5 billion (from a deficit of USD 6.6 billion). 

Manufacturing exports are closer to reach pre-outbreak levels. Using seasonally adjusted figures, manufacturing exports grew 1.5% month-over-month in September (from 3.5% in August), taking the quarter-over-quarter annualized growth rate (qoq/saar) to 471% in 3Q20. Within manufacturing exports, non-auto sales expanded 2.4% month-over-month, while auto exports fell by 0.2%, the first monthly contraction since the recovery started in June. We note manufacturing exports are now 2.4% below pre-outbreak levels (February), also using seasonally adjusted figures.​​​​​​

Intermediate goods are the main driver of non-oil imports, also reflecting the recovery of external demand. Non-oil imports expanded 5.9% month-over-month in September (from 6.7% in August), taking the qoq/saar to 91.6% in 3Q20. The recovery in non-oil imports is driven mainly by intermediate goods (a qoq/saar rate of 105.6% in 3Q20), while consumption (56.1%) and capital (34.1%) goods, associated to the internal demand, expanded at a softer pace. Despite strong sequential gains, non-imports stand at 9.8% below pre-pandemic levels.

We expect external accounts to improve in 2020 relative to 2019. Manufacturing exports are recovering at a faster pace than non-oil imports due to a better performance of domestic demand in the U.S. relative to Mexico (domestic demand recovery will be curbed by a modest fiscal stimulus and prevailing uncertainties over economic policy direction) and the weaker peso.

Julio Ruiz


< Back