Itaú BBA - Exports ensure large trade surplus in January

Macro Brazil

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Exports ensure large trade surplus in January

February 1, 2017

Exports went up in January led by basic items.

The trade surplus reached $2.7 billion in January, largely beating our expectation and market consensus(both at $2.0 billion). Exports totaled $14.9 billion, soaring 22.8% mom/sa. At $12.1 billion, imports advanced 4.7% mom/sa. Compared to January 2016, exports climbed 20.6% and imports increased 7.6%. 

Over 12 months, the trade surplus advanced to $50 billion. The seasonally-adjusted annualized quarterly moving average increased to $64 billion. The latest monthly result topped the January average of usually-weaker readings.

Exports were the biggest deviation from our call, climbing 20.6% yoy, adjusting for the number of working days. The increase was widespread, reaching basic goods (30%), semi-manufactured (27.5%), and manufactured goods (7.4%). On a seasonally-adjusted monthly basis, exports also went up (22.8%), led by basic items (39.4%). Higher prices for commodities that represent a large share of Brazilian exports (such as oil and iron ore) provided positive contributions. Notably, crude exports soared 156% and shipments of fuel oils increased 109%.

Imports increased in year-over-year terms for a second consecutive month, by 7.3% (adjusting for the number of working days), led by purchases of intermediary goods (22.8%), consumer goods (2.8%) and fuels (15.8%). Using the same metric, only capital goods imports receded (-40.1%). On a seasonally-adjusted monthly basis, total imports also advanced (4.7%), driven by intermediary goods (4.4%), durable consumer goods (2.9%), and fuels (4.8%). Purchases of capital goods, however, declined 10.9%. Albeit discretely, imports are pointing upward, in line with our forecast of some recovery in domestic demand this year.

Notwithstanding a stronger reading in January, we maintain our expectation of smaller trade surpluses in the next years than in 2016. In our view, a slightly stronger exchange rate (in real terms), the recovery in domestic demand and commodity prices below current levels will lead to weaker results, without compromising the country’s external sustainability.


Julia Gottlieb


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