Mexico registered its smallest trade deficit in three years as last year's gains in exports of manufactured goods helped offset a widening gap in its petroleum products trade.
The country ran up a $157 million deficit in December, bringing the full-year 2017 trade deficit to $10.88 billion, the National Statistics Institute said Friday. December exports rose 7.9% to $35.82 billion, and imports rose 8.4% to $35.98 billion.
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For the full year, exports were up 9.5% from 2016 at $409.49 billion, and imports increased by 8.6% to $420.37 billion. The country, which exports crude oil but imports most of its natural gas and gasoline, had an $18.4 billion deficit in petroleum trade and a $7.53 billion surplus in nonpetroleum trade.
Manufacturing exports rose 8.5% to $364.49 billion, led by an 11.8% increase in shipments of vehicles and auto parts, while agricultural exports were 8.9% higher than the previous year at $15.97 billion.
The year was marked by sharp swings in the value of the Mexican peso as the U.S., Mexico and Canada embarked on negotiations to rewrite the North American Free Trade Agreement. The peso hit a record low against the U.S. dollar in January, recovered by midyear, and weakened again toward the end of 2017 amid fears that U.S. President Donald Trump could decide to pull the U.S. out of the trade pact.
The peso has appreciated in recent weeks, however, amid optimism that progress will be made in the sixth round of Nafta talks, under way this week in Montreal, where the U.S. is expected to consider counterproposals from Mexico and Canada on rules of origin for the auto industry.
The U.S. has proposed sharply raising the North American content in cars that benefit from tariff-free imports into the U.S., including at least 50% U.S. content.
Changes in rules of origin could lead to a temporary slowdown in trade as auto makers adapt, said Marco Oviedo, head of Latin American economic research at Barclays. But "until we see acceptance of agreements, the risk is still there," he added.
Meanwhile, robust U.S. economic growth continues to support Mexican exports, of which around 80% go to the U.S.
"The Nafta rules continue, and until governments agree to other stuff, and congresses approve the changes, trade continues to flow as usual," Mr. Oviedo said.
One of Mr. Trump's aims in seeking to overhaul Nafta is to reduce the U.S. trade deficit with Mexico. The U.S. had a $65.68 billion deficit in goods trade with Mexico through November of 2017, compared with a $64.35 billion deficit in all of 2016, according to the U.S. Census Bureau. The Census Bureau is due to release trade data for December on Feb. 6.
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(END) Dow Jones Newswires
January 26, 2018 12:13 ET (17:13 GMT)