Mexico January Trade Deficit Surged to Widest Since 2008

Mexico reported its biggest trade deficit since 2008 on falling exports, supporting expectations that policy makers will cut the benchmark interest rate this year for the first time since 2009.

The deficit widened to $2.9 billion last month from $273.5 million a year earlier, the national statistics agency said in a preliminary report published today on its website. The gap surprised all 11 economists in a Bloomberg survey, whose median estimate was for a $216 million surplus. Exports fell 0.2 percent from a year earlier, the first drop since June.

Latin America’s second-biggest economy has been posting worse-than-expected results, with retail sales falling 1.8 percent in December, industrial output shrinking for the first time in three years and January’s unemployment rate rising more than estimated by all 16 analysts in a Bloomberg survey. Today’s report backs economists’ forecasts that the central bank will cut its 4.5 percent benchmark rate, said Gabriel Lozano, chief Mexico economist at JPMorgan Chase & Co.

“Data in December wasn’t good at all and today’s number definitely adds to some concerns about the speed of the recovery,” Lozano said in a phone interview from Mexico City. “It supports the call for a cut in the next few months.”

Economists surveyed by Bloomberg expect Mexico’s economy to grow 3.5 percent this year after expanding 3.9 percent in 2012.

The peso touched an eight-week low, weakening 0.6 percent to 12.8773 per U.S. dollar at 11:508 a.m. in Mexico City, as investor concern that the European debt crisis will worsen added to speculation the country will cut rates. Mexico’s central bank announces its next rate decision March 8.

While auto exports rose 8.3 percent in January from a year earlier, non-auto manufacturing exports fell 1.7 percent, according to Inegi.

“The softness in export growth and the higher-than-expected January unemployment print likely add weight to the arguments of those directors in the MPC who advocate in favor of rate cuts despite the fact that headline inflation is still tracking above the 3.0 percent target,” Alberto Ramos, an economist at Goldman Sachs Group Inc., wrote in an e-mailed research note today.

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