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 Business News | July 2005 
Nation's Exports Grew 9 Percent In June
 Patrick Harrington - Bloomberg News
| | Volkswagen AG is set to began manufacturing 1,500 Jetta sedans a day this year at its Puebla, Mexico factory. |
Mexico's exports rose 9.4 percent in June on higher oil prices and a recovery in U.S. manufacturing. Mexico exported US18.1 billion in June, up from US16.5 billion in the same month a year earlier, Mexico's Finance Secretariat said in an e-mailed statement. The trade deficit was US22 million, the government said, lower than a US46 million shortfall in the previous month and a US514 million deficit in June last year.
Mexico's export-assembly factories, usually foreign-owned plants known as maquiladoras, increased sales to the United States on the back of a 3.9 percent increase in U.S. industrial production from a year ago, the largest increase in three months. "The main driver for Mexican exports is the volume of demand from the United States," said Neil Dougall, chief emerging market economist at Dresdner Kleinwort Wasserstein in London.
"Maquiladora exports have been doing pretty well." Exports, the engine of economic growth since Mexico joined the North American Free Trade Agreement in 1994, may rise more than 10 percent this year, helping the economy grow 3.8 percent, according to Finance Secretariat estimates. At the 11 percent growth rate for the first five months of this year, exports will end 2005 at US209 billion, or four times the US52 billion total for 1993, the last year before Nafta went into effect.
The economy last year rose 4.4 percent after exports jumped 14 percent. In 2001, when exports fell 4.7, the economy shrank 0.2 percent. The automobile and parts industry, which makes up almost a fifth of Mexican manufacturing and is one of the country's largest export industries, saw higher demand from General Motors Corp., Ford Motor Co. and other automakers. GM, the world's largest carmaker, increased sales 47 percent in June, sparking optimism demand for Mexico vehicles and auto part will continue to rise.
Desc SA, which sells transmission and axle parts to Ford and DaimlerChrysler AG, said auto parts exports rose 21 percent to US126 million in April, May and June. "We build to platforms that are now very popular and the inventories they have are very low," said Arturo D'Acosta, chief financial officer at the Mexico City-based company, in a conference call with analysts on July 20. "Ford is producing as much as they can and they are demanding more from us."
Volkswagen Production
Volkswagen AG is set to began manufacturing 1,500 Jetta sedans a day this year at its Puebla, Mexico factory, which are being sold in the United States and 25 countries in Europe, said Thomas Karig, corporate relations director with Volkswagen in Mexico, in an interview from Puebla. "We are increasing production of course this year because we are launching this new car," Karig said.
Record-high oil prices have helped boost exports this year. In the first six months of the year, Petroleos Mexicanos, the country's oil monopoly, exported US12.56 billion of oil, a 32 percent increase from US9.54 billion a year ago. Pemex's average oil prices in the first half of the year jumped by a third from a year earlier to US37.91 a barrel. Mexican imports in June rose 6.2 percent to US18.1 billion, the government said.
Peso, China
The stronger peso is keeping exports from rising at an even quicker pace, said Jose Antonio López, labor secretary for the Mexican manufacturing state of Puebla. The peso has gained 4.7 percent against the dollar since the beginning of the year, making imported goods cheaper for Mexicans. "Without doubt the strengthening peso has hurt the export sector," said Antonio López, in an interview in the city of Puebla on July 19.
Mexican companies selling to the United States, which purchases about 85 percent of the country's exports, may get relief from Chinese competition after China decided to drop its currency's peg to the dollar, said Jorge Padilla, investor relations executive with Desc. The yuan yesterday strengthened 2.1 percent from its fixed rate of 8.3 yuan to the dollar.
Since joining the World Trade Organization in 2001, Chinese export growth to the United States has eclipsed Mexico's, taking market share from Mexican companies in textiles, auto parts, electronics and other goods. China, which overtook Mexico as the second-largest exporter to the United States in 2003, increased its U.S. exports last year 29 percent to US196.7 billion, outpacing Mexico's 13 percent rise to US156 billion. |
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