Maersk is maintaining its forecasts that Mexico will deliver another strong year of trade for 2018, with the first quarter benefiting from the World Cup, while manufacturing will continue to drive growth for the rest of the year.
“The World Cup is stealing the limelight as retailers ramped up stocks in the first quarter to meet demand ahead of the tournament, but it is manufacturing and in particular the auto sector that continue to drive underlying growth to Mexican trade this year,” Morgan Edwards, commercial director for Maersk Line Mexico and Middle America, said in Maersk’s Q1 2018 Mexico Trade Report.
World Cup 2018 will be hosted in Russia this year from June 14 through July 15.
The soccer tournament has been driving shipments from Asia to Mexico as the demand for new televisions prior to the event has increased, Mario Veraldo, managing director for Maersk Line Mexico and Middle America, told American Shipper in a phone interview.
Mexico’s import volumes from Asia during the quarter increased 11 percent year-over-year, while its export volumes to Asia tumbled 13 percent.
The sharp year-over-year decline in Mexico’s exports to Asia during the quarter primarily was due to China suspending import licenses of recyclable goods, such as paper and plastic bottles, to reduce pollution, according to the trade report.
“China’s decision to increase restrictions on waste imports and close down certain types of factories to reduce pollution continues to hurt Mexican exports, but this isn’t just a Mexican problem, this is a global issue,” Edwards said in the report.
Meanwhile, Mexico’s import volumes from Europe remained relatively stable during the quarter, ticking up 1 percent year-over-year.
However, Mexico’s export volumes to Europe surged 10 percent from last year’s first quarter. “This positive start to the year will likely go down well with economists, who believe manufacturing goods exports to the European Union will be one of the key ingredients that drives 2018 GDP growth — forecast around the 2 percent mark,” Maersk said in the report.
Overall, Mexico’s combined imports and exports with Asia and Europe collectively increased 6 percent year-over-year during the quarter.
Maersk projects Mexico’s combined imports and exports with Asia and Europe will collectively rise 6 percent in 2018 from the prior year.
The outlook for Mexico’s trade growth appears bright thanks to new trade deals.
In April, Mexico became the first country among 11 Pacific nations to ratify the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). CPTPP was signed March 8 in Santiago, Chile, by all original Trans-Pacific Partnership signatories, except the United States.
In addition to Mexico, the 10 other signatories of CPTPP are Australia, Brunei, Canada, Chile, Japan, Malaysia, New Zealand, Peru, Singapore and Vietnam.
“This agreement shall enter into force 60 days after the date on which at least six or at least 50 percent of the number of signatories to this agreement, whichever is smaller, have notified the depositary in writing of the completion of their applicable legal procedures,” according to the agreement.
“Meanwhile, Mexico and the European Union reached a new trade agreement in late April with nearly all goods between the bloc and the North American country becoming duty-free, including the agricultural products,” Maersk said in its report.
An “agreement in principle” on a modernized EU-Mexico trade deal was reached April 21. “The discussions are now focused on completing the technical details of the agreement; negotiators expect to have a final text in late 2018 before starting the legal revision of the agreement’s text (legal scrubbing),” the European Commission said.
Free trade deals will provide massive benefits to Mexico, Veraldo told American Shipper, adding that Mexico has the ability to use trade deals as a platform to really expand its production of perishables, particularly avocados and bananas, to Asia and Europe.