The country recorded a trade deficit of USD 5.965 billion in April, 49.8% wider year-on-year (YoY), reaching a four-year high due to a steep rise in the cost of mineral fuels and lubricants amid the ongoing US-Iran conflict. 

• Exports growth slows as Middle East conflict disrupts manufacturing: The easing of exports growth points to a sudden slowdown in manufacturing momentum. The escalation of the Middle East conflict resulted in critical disruptions and closures along major global trade routes, leading to halted shipments.
• Imports growth quickens on input frontloading and high energy costs: Manufacturers aggressively front-loaded orders for inputs as geopolitical tensions worsened. Furthermore, the country had to pay higher prices for imported fuel.

• Looking ahead, exports are expected to recover in the coming months, as shipping conditions in the Middle East improve as geopolitical tensions ease, while the relatively lower global oil prices should help partially reverse recent increases in shipping costs.  
• Meanwhile, imports are expected to remain elevated but may present mixed signals, as higher import values, driven by more expensive global commodities, mask subdued demand.
• The projected wider trade deficit is expected to exert further pressure on the peso. With this, any move toward the 60 level in dollar-peso exchange rate could present an opportunity for any impending dollar requirements, as we enter the imports season.