Mexico posts largest trade deficit on record as exports collapse

(C) Reuters. A trailer loaded with goods is pictured at the freight shipping company Sotelo, which transports goods between Mexico and the United States, in Ciudad Juarez

MEXICO CITY (Reuters) – Mexico on Monday posted its sharpest trade deficit on record in seasonally-adjusted terms as demand for its products abroad fell faster than imports, in a gloomy sign for Latin America’s second largest economy struggling with the pandemic’s fallout.

In April, Mexico posted a $4.293 billion trade deficit when adjusted for seasonal swings, the INEGI national statistics agency said on Monday. That compares to a trade surplus of $1.873 billion in March and surplus of $1.510 billion in April 2019.

The deficit posted in April was by far the largest on record, according to data dating back to 1991, as exports dropped 37.7% in seasonally-adjusted terms and imports fell 21.9%.

“Going forward we expect to see weak exports and imports driven by the sharp contraction of both global and domestic demand, lower commodity prices, and some supply chain disruptions due to extensive lockdown protocols,” said Goldman Sachs (NYSE:GS) economist Alberto Ramos.

Mexico’s economic growth is seen crumpling, with JP Morgan projecting a steep 40% decline in the second quarter versus the prior quarter and 8.4% contraction overall for 2020.

INEGI data earlier this month showed Mexican auto production and exports collapsed, as the pandemic forced shut car manufacturing plants and sapped consumer demand for new vehicles. Production plunged 98.8% in April from a year earlier, while exports fell 90.2%.

In non-seasonally adjusted terms, Mexico posted a trade deficit of $3.087 billion. It was the biggest deficit in non-seasonally adjusted terms since January 2019.

Separately, the Bank of Mexico, the nation’s central bank, reported a first quarter current account deficit $982 million, equivalent to 0.4% of gross domestic product, helped by rising migrants remittances and export income before global lockdowns began to bite.

That compares to a current account deficit of $11.1 billion, equal to 3.6% of GDP in the first quarter 2019.