Mexico’s exports are booming. In fact, in July they increased by 44% compared to last year, and are up almost 28% year to date. Mexico is now firmly the largest exporter to the United States, ahead of Canada and China.

One would think that kind of growth would be exceptional for Mexico and its economy. But is it really as good as it sounds?

A few reasons for caution:

• The growth is concentrated. Electrical and electronic equipment, including AI servers, jumped 134% in July and overtook autos for the first time. Auto exports are roughly flat this year, and oil exports are down.
• Imports are booming too. They are up about 26% year to date and grew 45.7% in July, producing a rare monthly trade deficit. Imports from Taiwan have more than tripled. If imports are up as much as exports, what is Mexico adding?
• Value added is thin. An estimated 3 cents of every dollar of electronics exports is Mexican added value, roughly a tenth of what Mexico adds in the vehicle segment.
• The economy isn’t keeping pace. Mexican GDP is generally expected to grow only 1.2%-1.5% this year, well below the U.S. growth rate.

So what is really going on, and what does it mean for Mexico?

Check out this week’s “Confidently Wrong” podcast as we dig a bit deeper into the numbers for a better understanding of the real implications.

Travis Bembenek is the CEO of Mexico News Daily and has been living, working or playing in Mexico for nearly 30 years.