Import growth outstripped export performance in the early 1990s, producing a steadily widening trade deficit. In 1988 Mexico's trade surplus had fallen to US$1.7 billion, and the following year it turned into a US$645 million deficit as imports rose 24 percent against export growth of 11 percent. In 1990 the trade deficit widened to US$4.4 billion, despite a rise in international oil prices resulting from the Persian Gulf War. Petroleum exports rose slightly, and nonoil exports grew 12 percent in 1990, producing total export earnings growth of 18 percent. But total imports increased a much more rapid 34 percent. In 1991 the trade gap widened further to US$7.3 billion, as the level of exports remained steady while imports grew 22 percent. Mexico's trade deficit widened again to US$15.9 billion in 1992. Following a slowdown in import growth in 1993, the trade deficit increased substantially in 1994, the first year under NAFTA. Low interest rates and an overvalued new peso bolstered demand for foreign goods, causing imports to grow an estimated 19 percent. Spurred by the newly devalued currency, Mexico's foreign trade balance swung dramatically back to a US$7.1 billion surplus in 1995, effectively eliminating the country's current account deficit. The trade surplus was US$1.7 billion for the first quarter of 1996, compared with the first quarter of 1995 figure of US$647 million.
Direction of Trade
Largely as a result of trade liberalization, two-way trade between Mexico and the United States doubled between 1986 and 1990. In the late 1980s, Mexico expanded its exports to the United States at an average annual rate of 15 percent. Even prior to NAFTA, more than 85 percent of Mexican exports entered the United States duty-free (see table 12, Appendix).
In 1994 the value of two-way United States-Mexico trade amounted to more than US$100 billion. Mexico exported US$53 billion worth of products to the United States and imported US$56 billion worth of United States goods. Mexico's commercial reliance on the United States has increased in recent years, despite efforts to diversify its export markets and import sources. In 1994 the United States took 85 percent of all Mexican exports (up from 83 percent in 1993). Sales to Mexico accounted for only 8 percent of all United States exports in 1991. Sales to Canada amounted to more than US$1.5 billion, or 2 percent of Mexican exports in 1994; sales to Japan amounted to US$997 million, or less than 2 percent. Spain, Germany, and France together accounted for nearly US$2 billion, or 3 percent, of Mexico's export revenue in 1994. In 1994 the United States provided 69 percent of Mexico's imports, Japan 6 percent, Germany 4 percent, Canada 2 percent, and France 2 percent.
Mexico's sales to other Latin American countries totaled US$2.9 billion in 1993, a 65 percent increase over 1988. Nevertheless, these sales constituted only some 10 percent of Mexico's total exports by value. Two-way trade between Mexico and the rest of Latin America increased to about 250 percent between 1988 and 1993. Mexico's most important trading partners in Latin America were Argentina and Brazil.
Data as of June 1996