The Mexican economy experienced a slow down in imports and a rise in exports, signaling a lower trade deficit than the same period last year, reports the National Institute of Statistics and Geography (INEGI).
According to INEGI’s report, in July 2023, “the value of merchandise exports reached US$47.55 billion, a figure composed of US$44.821 billion of non-oil exports and US$2.73 billion of oil exports.” In total, exports showed an annual increase of 2.9%, with non-oil exports increasing by 5.7% and exports to the US growing by 6.9% year over year. Exports to the rest of the world grew 0.3%. Oil exports, on the other hand, fell by 28.5%.
“The value of merchandise imports reached US$48.432 billion, which implied an annual reduction of 7.7%. This figure resulted from the combination of a 50.8% decrease in oil imports and a 0.3% increase in non-oil imports. When considering imports by type of good, annual decreases of 9.1% were observed in imports of consumer goods and 10.4% in those of intermediate-use goods. Imports of capital goods grew 23.3%,” reports INEGI.
The dive in imports has been the sharpest since October 2020. June and July 2023 represent a backtracking in Mexico’s trade, which had not happened since the period between June 2019 and November 2020, when Mexico experienced 16 months in the negatives.
In July of this year, “timely foreign trade information indicates a trade deficit of US$881 million, a balance that compares with a deficit of US$6.2 billion in the same month of 2022. In the first seven months of 2023, the trade balance showed a deficit of US$7.225 billion, in the same period of 2022 the deficit was US$19.037 billion,” reads INEGI’s press release.
The decrease in imports could be attributed to the Ministry of Economy’s decision to increase import tariffs on products from countries with which Mexico does not have a trade agreement. The products affected include steel, textiles, plastics, glass, chemical products, oils and more. The 5% to 25% increase came into effect Aug. 16, 2023, and will last up until July 31, 2025.
On the other hand, exports may be increasing due to the rise in investments that have followed the nearshoring trend. Alberto Moreno, Senior Director, Fitch Ratings, tells MBN that “Mexican exports of manufactured goods grew 11% in the last 12 months (LTM) ended June 30, 2023, according to National Institute of Statistics and Geography (INEGI). The potential is for US$50 billion of additional exports, 10% of 2022 total exports.”