Itaú BBA - MEXICO – Trade balance improved in June

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MEXICO – Trade balance improved in June

July 27, 2020

A slower recovery in imports relative to exports supported the improvement in the trade balance

The trade balance was above market expectations in June, supported mainly by the non-oil trade balance. The monthly trade balance posted a surplus of USD 5.6 billion in June, above our forecast of USD 1.0 billion surplus and median market expectations (USD 1.5 billion surplus, as per Bloomberg) – taking the 12-month rolling trade balance to a surplus of USD 4.8 billion in June (from a surplus of USD 1.8 billion in May). The improvement in the trade balance was driven mainly by the non-energy balance (also using 12-month rolling figures), which posted a surplus of USD 23.2 billion in June (from USD 21.7 billion in May), while the energy trade deficit improved to USD 18.4 billion (from a deficit of 19.8 billion). At the margin, using 3-month annualized seasonally adjusted figures, the trade balance stood at a deficit of USD 14.6 billion in 2Q20 (from a surplus of USD 20.7 billion in 1Q20), with the energy trade balance posting a deficit of USD 9.4 billion (from a deficit of USD 21.5 billion), while the non-energy trade balance stood at a deficit of USD 5.2 billion (from a surplus of USD 42.2 billion). We note that while the trade balance deteriorated at the margin from 1Q20 to 2Q20, it improved from May (deficit of USD 25.3 billion) to June (deficit of USD 14.6 billion).


First positive monthly growth print in manufacturing exports in June after the negative shock from COVID-19. Using seasonally adjusted figures, manufacturing exports recovered 83.6% month-over-month in June (from a low base in May), taking the quarter-over-quarter annualized growth rate (qoq/saar) to -85.0% in 2Q20 (from 5.9% in 1Q20). Auto sales recovered at a fast pace in June (534.4% month-over-month) as distancing measures for that sector were lifted. Likewise, oil exports recovered in June (49.7% month-over-month) supported by an upturn in oil prices.  

Imports also recovered in June, but at a slower pace than exports. Total imports and non-oil imports expanded 22.2% and 23.1% month-over-month in June, respectively, taking the qoq/saar to -75.5% and -72.4% in 2Q20, respectively.  Within non-oil imports, consumption, intermediate and capital goods stood at -80.5%, -73.2% and -51.2% qoq/saar in 2Q20.


We expect external accounts to improve in 2020 relative to 2019. We expect external sales to recover at a faster pace than 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

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