Itaú BBA - MEXICO – Trade deficit narrowed in April

Macro Latam

< Volver

MEXICO – Trade deficit narrowed in April

mayo 24, 2019

At the margin, manufacturing exports and non-oil imports weakened

Trade deficit narrowed in April. Monthly trade balance posted a USD 1.4 billion surplus in April, above median market expectations (USD 0.2 billion deficit, as per Bloomberg) – taking the 12-month rolling deficit to USD 12.1 billion in April (from a deficit of USD 13.7 billion in March). Looking at the breakdown, also using 12-month rolling figures, energy deficit deteriorated slightly (USD 23.6 billion in April, from USD 23.2 billion in March), while non-energy balance improved somewhat, posting a surplus of USD 11.6 Billion (from USD 9.5 Billion). At the margin, using 3-month annualized seasonally adjusted figures, trade deficit improved to USD 1.7 Billion in April (from USD 4.1 billion deficit in March), with the energy deficit deteriorating to USD 20.3 billion (from a deficit of USD 19.3 billion), while the non-energy surplus improved somewhat to USD 18.6 billion (from USD 15.2 billion).


 

At the margin, manufacturing exports deteriorated in the quarter ended in April. Using seasonally adjusted figures, the quarter-over-quarter annualized growth rate of total exports deteriorated to 1.0% in the quarter ended in April (from 4.9% in March), dragged by manufacturing exports which fell by 1.8% (from 3.1%). The deterioration in manufacturing exports reflects a soft external demand. 



 

Imports also deteriorated on a sequential basis in the quarter ended in April, reflecting some weakness in internal demand. Using seasonally adjusted figures, the quarter-over-quarter annualized growth rate of total imports was -7.4% in the quarter ended in April (from -4.8% in March). Looking at the breakdown, non-oil imports deteriorated to -6.8% qoq/saar in the quarter ended in April (from -0.5% in March), with consumer ex-oil (0.3%, from 4.5%), intermediate ex-oil (-7.7%, from -0.9%) and capital (-7.4%, from -1.9%) goods weakening. Soft non-oil imports reflect weakness in internal demand. 

We expect the trade deficit to remain broadly stable between 2018 and 2019. Oil production doesn’t seem to be stabilizing yet and the deceleration of the U.S. economy will exert downward pressure on Mexico’s manufacturing export growth. However, uncertainty over domestic policies and over the USMCA approval in US Congress will likely curb internal demand.


Julio Ruiz



< Volver