The characteristics of trade between Central America and Mexico

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When analyzing trade between Central America and Mexico, there is a difference in statistics that have been recorded according to the country that has reported the figures.

In this article, trade categorization is based on data reported by Mexico. This information includes information on the exports that Central American countries send to their Latin American neighbor under the free zone regime.

In the second section of this post, the data reported by Central American countries are used to examine trade between Central America and Mexico. With the exception of Costa Rica and Honduras, this data only includes exports under the national regime, excluding free zones. The biggest difference between the two parties is seen in the type of goods that are sold in each other’s national markets.

Mexico’s exports to Central America are characterized by a greater value of embedded technology, especially of manufactures consisting of low and medium-tech.  Products that are sourced in Central America and sold to Mexico are primary and natural resource-based goods, especially in the cases of Honduras, Nicaragua, and Panama.

Mexico sends medium-tech manufactures to the countries on the isthmus

Generally speaking, export trade from Mexico to Central America has essentially consisted of medium-tech manufactures, including parts for passenger and commercial vehicles, as well as for motorcycles; synthetic fibers; chemicals; paint; fertilizers; plastic goods; pipes; machines, and engines. These types of goods accounted for 37.5% of Mexican exports to Central America in 2017.  This is a percentage that is very similar to that recorded as far back as 1994 (34.5%). 

At the country level, almost all Central American partners have imported mainly this type of product during the period 1994-2017, with the exception of Honduras and Nicaragua, which increased their imports of these types of products in 2017.

The second most exportable goods from Mexico to Central America have been natural resource-based items, covering fruit and meat preparations, beverages, wood products, vegetable oils, basic medicines, petroleum derivatives, cement, gemstones, and glass. This array of goods accounted for an average of 20.5% of exports from Mexico to Central American countries, a percentage almost equal to that reported in 1994.

Nicaragua has increased its imports of these types of products from Mexico the most.  Although in all cases, with the exception of Honduras and Panama, growth has been recorded.

Following these types of goods are exports of low-tech manufactures composed of textiles, clothing, footwear, leather manufactures, ceramics, simple metal structures, furniture, jewelry, toys, and plastic products.

In 2017, Mexican exports of this type fell by 20.2%.  This percentage was very close to that registered in 1994 (19.6%). However, a trend toward a slight increase in purchases of these items is seen in Costa Rica, Honduras, Nicaragua, and Panama, while the rest of the countries have decreased their imports of these goods.

Mexican exports of high-tech manufactured goods to Central America have fallen by nearly three percentage points between the years of 1994 to 2017, from 16.2% to 13.5%.

The largest reduction in this type of product was recorded in Honduras and Nicaragua, while in the rest of the Central American countries there was a slight increase. These exports consist of data processing machines, telecommunications equipment, televisions and transistors, turbines, power generating equipment, pharmaceuticals, optical and precision instruments, as well as photographic cameras.

Finally, Mexican exports of primary products to Central America accounted for less than 6% of that country’s total sales to the region.

In 2017, the largest percentage of imports of this type of product were recorded in Nicaragua and El Salvador, which acquired 9.9% and 8.9%, respectively. These types of goods include fresh fruit, meat, rice, cocoa, tea, coffee, wood, coal, crude oil, gas, concentrated minerals, and scrap.

On the side of Mexico’s imports of Central American products, there is a significant change in the types of products exported by Central America to Mexico between the years of 1994 to 2017 in virtually all of the region’s countries.   This is despite the fact that, globally, Mexico would appear to have maintained the same import structure.

Trade between Central America and Mexico is made up of natural resource-based products

On average, most of Mexico’s imports from Central American countries have been comprised of natural resource manufacturing.

In 1994, these goods accounted for 27.4% of Mexico’s imports from Central America.  By 2017 this percentage had increased to 30.4%. The Central American countries that exported most of this class of goods to Mexico in 2017 were Panama (87.8% of its exports to Mexico), Costa Rica (49.8%) Guatemala (46.3%).

Low-tech manufacturing has become the second type of goods imported by Mexico from Central America. In 2017, these goods accounted for 24.3% of Mexican imports, which is almost two percentage points more than the amount that was recorded in 1994.

The Central American countries from which Mexico imported the most of such products in 2017 were El Salvador (49.6% of the total imported) and Honduras (41.9%). Mexico’s imports of medium-tech manufactured products from Central America have also increased from 1994 to 2017 by more than six percentage points.

 In 2017, these items accounted for 22.9% of its purchases from Central America. Nicaragua was the country that imported the most such products in 2017, (51.6% of its imports) followed by El Salvador (34.1%) Costa Rica (20.8%).

A major change in the structure of  Mexican imports from Central America is the decline in primary products. In 1994, 24.9% of the region’s imports were of this type of product category.  They originated mainly in Nicaragua (88%), Guatemala (29.1%), Honduras (17.3%), and Panama (17.4%). By 2017, this percentage decreased to 13.2%, with Nicaragua (24.3% of the total imported), Guatemala (19.6%) Honduras (13.5%) as the leading Central American suppliers.

Finally, high-tech imports by Central American nations from Mexico have seen a decline in recent years. In 1994, these assets accounted for 6.6% of Mexican made products purchased in the region, mainly by Panama and Costa Rica. By 2017, this percentage was reduced to half (3.4%); their main buyers were El Salvador and Costa Rica.