Mexico's trade deficit to rise in January on base effects, rising imports: Societe Generale

Quotes from Societe Generale Cross Asset Research:

-Mexico's lower-than-expected trade surplus in December 2014 (USD254m) brought the full year trade deficit to USD2,441m as against a trade surplus of USD1,184m in 2013. That was the only bad part of the trade release, however.

-Merchandise export growth was 6.4% yoy in December, higher than the six-month average of 5.2%, while import growth at 11.2% yoy was the strongest in 20 months (and the key reason for such a low trade surplus in December). Over the full year, exports grew by 4.6% while imports were up 4.9% (as against 2.5% and2.8% respectively in 2013).

-Despite its arithmetically negative impact on the trade balance, and through its direct contribution to growth, the strong imports number suggests strengthening investment growth in Q4 (and probably a pick-up in consumption).

-We expect yet another strong month on the trade front (SGe: exports 9.5% yoy, imports 8.4% yoy) in January even while the trade balance will likely drop to -USD3151mn primarily on seasonality and base effects.