Trade Surplus for Mexico May Show Peso’s Silver Lining

Mexico had its first monthly trade surplus in more than four years in February, according to preliminary figures compiled by the central bank. It is a sign that one of the anticipated benefits of the devastating peso devaluation may be emerging.

Analysts and U.S. government officials said the speed with which the turnaround in trade apparently occurred suggests that Mexico ultimately may be able to pull out of its economic nose dive. Mexico’s long-standing trade deficits helped to weaken the peso and forced the government to borrow dollars to pay foreign investors.

Analysts said that creating a trade surplus is important, but is only one element in solving the nation’s financial problems.

“It’s not enough to give Mexico a quick recovery, but it’s certainly enough to help pay the bills,” said Rudiger Dornbusch, a Massachusetts Institute of Technology economics professor. “The surprise is that, on the export side, it has worked so quickly.”

According to Banco de Mexico figures, Mexico registered a $452-million positive balance of trade in February. It had a trade deficit of $530 million in January, the first month after the peso devaluation touched off the country’s financial crisis. The last time Mexico had a positive monthly trade balance was in November, 1990.

Since December, the peso has lost 50% of its value, and that has plunged the country into a deep recession. Confidence in the government has been shaken both by its handling of the economic crisis and by evidence of corruption among some high-level officials.

In the first two months of 1995, Mexico’s exports climbed 31.3% beyond those of January and February in 1994, while imports declined by 1.6%.

Imports have been hit with a double whammy. The devaluation made foreign goods more expensive and also reduced the real earnings of Mexicans, who are less able to afford them. Exports benefited because the devaluation made them cheaper abroad, and Mexico was able to divert goods produced for domestic consumption to markets in the United States, said Lawrence Goodman, vice president of Salomon Brothers Inc.

“The numbers are encouraging but there are still a number of wild cards,” such as continuing demand for dollars to redeem dollar-denominated debts, he said.

“The fact that by February, already the trade balance had swung to surplus is a step in the right direction,” said a U.S. government official who spoke on condition that he not be named.

The trade figures “are very much in line with the government’s plan for the year,” said William R. Cline, a senior fellow with the Institute for International Economics. The Mexican government has said it hopes to increase exports this year by 35%.

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