Mexican trade details likely strengthened in July

After two months in a row of yoy declines in exports and imports in April and May, dollar trade numbers improved in June (something also noticed in better manufacturing number for that month). Given strengthening US demand, we expect trade numbers to improve further in July although the trade balance continued to fall on stronger imports.

Unlike the weakness in value terms, trade volume growth has been reasonably satisfactory and strong real export growth is expected in 2015 and beyond.

In 2014, exports grew by 4.6%, while imports were up 4.9%. The current account balance improved slightly to -2.1% from -2.4% of GDP in 2013. However, it remains significantly below the much healthier -1.3% in 2012. 

"In general, stronger manufacturing export growth in H2 2015 and 2016 should help keep the current account balance unchanged, although lower oil prices could also keep it from improving. Falling oil prices have hit both the external account and Mexico's public finances", says Societe Generale.

As a result, the current account balance deteriorated by between 0.5% and 0.8% of GDP on a structural basis, and it would take considerable improvement in manufacturing exports or penetration of new markets to see the current account return to its former size.