Global Insight Perspective

Significance

April's trade results are the consequence of the seasonal effects of this year's Easter holiday having fallen in March rather than in April.

Implications

We should expect a similar pattern to that of exports and imports for almost all of the indices that will be released in the coming weeks on the performance of the Mexican economy during the month of April.

Outlook

Global Insight expects the Mexican economy to rebound significantly in April and help the second-quarter GDP numbers, as well as to remain relatively healthy for the second half of the year on account of still strong consumer and construction markets, both helped by the strong performance of petroleum prices.

Now Comes the Rebound

Mexican economic indicators will now begin to show the effects of the 'seasonal' rebound in activity. The first such number to come into the picture was the trade sector. The results of the trade sector in April were the confirmation of the effects of seasonal factors in economic activity. Mexican exports were US$17.384 billion during the month, or 18.1% higher than during the same month a year earlier. This increase in exports was the result of a 41.4% year-on-year (y/y) increase in petroleum and related products, while non-petroleum-related exports increased by 15.0%, also on a year-earlier basis.

Manufacturing exports surged by 14.7%, with Maquiladora manufacturing exports posting a 15.1% increase, while traditional manufacturing exports increased by 14.1%. The performance of these sectors in March was 0% for the total manufacturing sector exports, while Maquiladora manufacturing increased by 2.1% and traditional manufacturing sector exports dropped by 2.3% compared to March of the previous year.

Meanwhile, the value of Mexican imports increased to US$18.013 billion, or 16.8% higher than those recorded during the same month a year earlier. Imports of consumer goods increased by 30.1% y/y to April, while imports of capital goods increased by 23.2%. At the same time imports of intermediate goods increased by 13.6% compared with the same month a year earlier.

Outlook and Implications

We should expect a similar pattern to that of exports and imports for almost all of the indices that will be released in the coming weeks on the performance of the Mexican economy during April. However, as we explained during our March industrial production report, as well as in our GDP report, these data releases will reflect the rebound from the effects the Easter holiday had on Mexican production numbers during the month of March, not a real strengthening of the Mexican economy.

This means that we will have to wait until the May figures are released in order to establish what is really happening to the Mexican economy and what the trend to expect for the rest of the year is. However, as we have argued before, we expect the Mexican economy to rebound strongly in April and help second-quarter GDP numbers, as well as to remain relatively strong for the second half of the year on account of still healthy consumer and construction markets, both helped by the strong performance of petroleum prices.