Mexico's Trade Deficit Widened to Worst on Record in January

(Bloomberg) -- Mexico's trade deficit widened to the most on record in January and was wider than forecast by any economist surveyed by Bloomberg.

Key Points

• Trade gap widened to $4.41 billion from $157 million in December and $3.47 billion a year earlier, according to statistics institute known as Inegi.
• Economists expected a $3.44 billion deficit, based on the median of 12 estimates in a Bloomberg survey. The widest deficit forecast was $3.92 billion
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Big Picture

Mexico's widening trade deficit is less a product of weak exports or factory production and more a result of rising imports, according to Felipe Hernandez, an economist at Bloomberg Economics. Mexico's non-oil exports grew 12 percent in January from a year earlier, with manufactured goods rising 10 percent, up from 5.3 percent in December. This was more than offset by in increase in imports, excluding crude, which climbed 19 percent in the same period.

The biggest contributor to Mexico's trade deficit in recent years has been China. While January data by country won't be available until a separate Inegi report next month, Mexico had a $5.75 billion deficit with the world's largest emerging economy in December, compared with a $1.1 billion surplus with the U.S., with whom the nation is renegotiating the North American Free Trade Agreement. Mexico's deficit with China and imports of manufactured goods have surged since the Asian nation joined the World Trade Organization -- the same as for the U.S.

--With assistance from Rafael Gayol and Felipe Hernandez (Economist)

To contact the reporter on this story: Eric Martin in Mexico City at emartin21@bloomberg.net.

To contact the editor responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net.

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