MEXICO – The trade balance deteriorated in 2Q21

Global microchip shortage is likely still affecting manufacturing exports

Julio Ruiz


The trade balance was below market expectations in June. The monthly trade balance posted a surplus of USD 0.8 billion in June, close to our forecast of a surplus of USD 0.4 billion and below market expectations of a surplus of USD 2.0 billion (as per Bloomberg), taking the 12-month rolling trade balance to a surplus of USD 32.7 billion in June (from a surplus of USD 37.5 billion in May). Looking at the breakdown, also on a 12-month rolling basis, the trade surplus narrowed in June due to a reduction in the non-energy trade surplus (USD 50.8 billion in June, from USD 54.1 billion in May), while the energy trade deficit deteriorated to USD 18.1 billion (from a deficit of USD 16.7 billion). At the margin, using 3-month annualized seasonally adjusted figures, the trade balance deteriorated to a deficit of USD 3.4 billion 2Q21 (from a surplus of USD 5.0 billion in 1Q21), with the energy trade deficit at USD 21.4 billion (from a deficit of USD 26.0 billion), while the non-energy trade balance posted a surplus of USD 18 billion (from a surplus of USD 31 billion).

The global microchip shortage is likely still affecting manufacturing exports. Using seasonally adjusted figures, manufacturing exports deteriorated in June (-1.4% month over month), dragged by a sharp fall in vehicle exports of 6.0% which seems still affected by the microchip global supply disruption. Even so, the quarter-over-quarter annualized growth rate (qoq/saar) of manufacturing exports stood at 10.3% in 2Q21.

Still positive momentum in non-oil imports in 2Q21. Also using seasonally adjusted figures, non-oil imports grew 0.2% month over month, taking the qoq/saar to 25.1% in 2Q21. Looking at the breakdown, the qoq/saar of non-oil consumption, intermediate and capital goods imports in 2Q21 stood at 35.1%, 25.6% and 10.9%, respectively.

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). We expect the trade balance to be supported by manufacturing exports (strong US growth) as the global microchip shortage fades away during the rest of the year, which will be partly mitigated by a recovery in non-oil imports as the economy rebounds. However, the resurgence of the outbreak is an upside risk to external accounts as it may lead to a slower recovery in internal demand relative to external demand.

Julio Ruiz