MEXICO – The trade balance deteriorated further in July

Vehicle exports seem are still affected by the global microchip supply disruption

Julio Ruiz


The monthly trade balance posted a deficit of USD 4.1 billion in July, below our forecast of a deficit of USD 1.0 billion and below market expectations of zero (as per Bloomberg), taking the 12-month rolling trade balance to a surplus of USD 23.0 billion in July (from a surplus of USD 32.7 billion in June). The deterioration in the trade balance was driven by a lower non-energy trade surplus of USD 42.3 in July (from USD 50.8 billion in June), also on a 12-month rolling basis, while the energy trade balance stood at a deficit of USD 19.3 billion (from a deficit of USD 18.1 billion). At the margin, using 3-month annualized seasonally adjusted figures, the trade balance deteriorated to a deficit of USD 17.7 billion in the quarter ended in July (from a deficit of USD 7.4 billion in 2Q21), with the energy trade deficit at USD 24.1 billion (from a deficit of USD 21.9 billion), while the non-energy trade balance posted a surplus of USD 6.4 billion (down from a surplus of USD 14.5 billion).

Manufacturing exports improved in July supported by non-vehicle exports. Using seasonally adjusted figures, manufacturing exports grew 1.9% month over month in July, with non-vehicle exports growing at 4.2%, while vehicle exports deteriorated further (-3.0%, from -7.7% in June) likely still affected by the global microchip supply disruption. The quarter-over-quarter annualized growth rate (qoq/saar) of manufacturing exports stood at 10.4% in July.

Non-oil imports registered a solid expansion in July supported mainly by intermediate and capital imports. Also using seasonally adjusted figures, non-oil imports grew 4.5% month over month in July, taking the qoq/saar to 29.3%. Looking at the breakdown, the qoq/saar of non-oil consumption, intermediate and capital goods imports in July stood at 52.7%, 30.0% and 2.1%, respectively. We also note oil imports (mainly gasoline) grew at a solid 7.9% month over month in July (or 15.4% qoq/saar) likely associated to improved mobility measures.

We expect the trade surplus to narrow in 2021 (USD 12 billion) relative to 2020 (USD 34 billion), with a current account surplus of 0.6% of GDP this year (from 2.4% of GDP in 2020). While the trade surplus will narrow substantially from the 12-month rolling figure, we expect external accounts to remain solid which combined with higher interest rates should benefit the Mexican peso.  

Julio Ruiz