Mexico’s Trade Gap Wider Than Expected

Mexico posted a wider-than-expected trade deficit for December, as a strong peso and lower oil prices hurt export earnings, while strong economic growth boosted imports of capital and consumer goods. The $722-million deficit, the sixth in a row and the largest in three years, was more than double November’s $347-million trade gap. The number “makes a front-page issue” of the threat posed by lower oil prices and a strong peso to Mexico’s 2-year-old economic recovery, said Miguel Diaz, senior economist at Nikko Research Center Inc. in New York. That’s because growing trade deficits in Mexico have often been precursors of disruptive devaluations. Although most economists believe it’s too early to tell if December’s trade gap is a sign of worse times to come, exporters are already finding it harder to compete. While the peso has remained steady, Asian currencies have tumbled since last summer, making that region’s products cheaper.