The Day at a Glance | August 28 2023

*Mexico’s trade balance reported a smaller than expected deficit in July.  

*The President of the European Central Bank, Christine Lagarde, stated that she will increase benchmark interest rates as much as necessary in order to curb inflation. She stated this in the central bank symposium in Jackson Hole. 

*The internal process for potential Morena presidential candidates ended this weekend. Results will be announced on September 6th.

Economic environment

Mexico´s trade balance logged a -$881 million dollar deficit. This is smaller than the -$1,660 million dollar figure forecasted by the market, and the -$6,247 million dollar deficit recorded in the same month last year. The smaller deficit is explained by an annual -7.69% decrease in imports, which in turn can be attributed to a -50.77% setback in oil imports, attributable at least in part to lower crude oil prices, overshadowing the increase in non-oil consumer goods (+18.35% y/y) and capital goods (+23.32% y/y). On the other hand, exports recorded a slight annual expansion (2.89%), rebounding from the 1.13% y/y figure recorded in June. This slower growth compared to the recent past is also due to a significant decline in oil exports (-28.5% y/y), but this was offset by an expansion in non-oil exports (5.71% y/y), specifically in manufacturing, which increased 6.75% y/y due to growth in shipments in the automotive sector (+35.74% y/y). With this, figures for the first seven months of 2023 point to an accumulated deficit worth -$7.725 million dollars; less than the -$19,037 million dollars logged a year ago.