Economics: The export sector is driving Mexico's economic recovery

MEXICO - Report 13 Jun 2022 by Mauricio González and Francisco González

The export sector has been the only one to maintain considerable growth and momentum in the past few years. Indeed, its growth has triggered the (still insufficient) recovery of the Mexican economy. Exports of agricultural and food products maintained their growth in the most complicated months of the pandemic and increased even more in 2021 and the first four months of this year, gaining a considerable share of the U.S. market. Meanwhile, other manufacturing branches that produce industrial inputs such as steel, mining and metallurgy, and the wood industry have benefited from the significant increase in commodity prices in the context of the global economic recovery in 2021 and the current situation of scarcity and uncertainty mainly derived from the Ukrainian conflict. In contrast, the automotive industry has not been able to significantly surpass its pre-pandemic levels, as it continues to face serious problems in obtaining key inputs, such as semiconductors, given the supply chain disruptions that continue to occur.

An analysis of the components of non petroleum exports indicates that foreign sales of manufactured goods rose 15.8% in the first four months of the year, followed by agricultural exports with 7.0% growth, and mining exports, which climbed 3.9% in the same period. With these increases, the different types of non petroleum exports have already significantly surpassed their pre-pandemic levels. The fact remains that exports have been the only sector that has driven a certain amount of the economic recovery, mainly due to foreign sales of manufactured goods, with the exception of transportation equipment and some agricultural and food products.

In terms of Mexico's competitiveness in relation to other nations, it should be noted that the country has not significantly increased its exports to the United States in order to take advantage of the obstacles to foreign trade given the Russia-Ukraine conflict or the quarantine measures applied in China. However, in the medium term, non petroleum exports face the risk of a contraction in demand due to the expected slowdown in the U.S. economy over the next year.

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