Mexico posts unexpectedly large trade deficit as auto exports struggle

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A carrier trailer transports Toyota cars for delivery while queuing at the border customs control to cross into the U.S., at the Otay border crossing in Tijuana, Mexico May 31, 2019. REUTERS/Jorge Duenes

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MEXICO CITY, April 27 (Reuters) - Mexico posted a larger-than-expected trade deficit in March, with a global shortage of chips hobbling the country’s vast automobile exports sector, data published by the national statistics agency INEGI showed on Tuesday.

Latin America's second largest economy posted a $2.906 billion trade deficit last month when adjusted for seasonal swings. The deficit was $3.004 billion in non-seasonally adjusted terms.

"The weak performance of auto exports in February-March reflects to some extent supply chain disruptions caused by gas supply restrictions in parts of the U.S. and Mexico and scarcity of semiconductors," Goldman Sachs economist Alberto Ramos said in a note.

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Automakers including General Motors Co (GM.N), Ford Motor Co (F.N) and Toyota Motor Corp (7203.T) have cut production this year due to a global semiconductor chip shortage.

Manufacturing exports, which account for roughly 30% of Mexico's gross domestic product, jumped by 9.9% in March versus a year earlier and increased by 2.2% during the first three months of the year on an annual basis, according to INEGI data.

That was weighed down in March by a 5.2% drop in auto exports, which account for roughly a third of all manufacturing shipments, and a 4.8% drop in January to March shipments of cars.

The reactivation of Mexico's manufacturing sector "will be slower than previously expected due to the problem with a chip" shortage in the automotive sector, economist Jose Luis De la Cruz said.

He added, though, that a low base of comparison in April and May 2020 should boost figures over the next couple of months.

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Reporting by Anthony Esposito; Editing by Drazen Jorgic and Paul Simao

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