Itaú BBA - CHILE – End of mining strike lifts trade balance in May

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CHILE – End of mining strike lifts trade balance in May

June 7, 2017

The current-account deficit would remain broadly stable from last year at 1.2% of GDP.

Following the conclusion of a major mining strike in February and March, mining exports are recovering and resulting in the continuance of a comfortable trade balance. The USD 723 million surplus in May (USD 524 million market consensus; Itaú: USD 470 million) camein above the USD 564 million recorded one year ago as mining and industrial exports improve. The rolling 12-month trade surplus came in at USD 4.2 billion, broadly stable from 1Q17 (USD 5.3 billion in 2016), reflecting low external vulnerabilities. Our seasonally adjusted series shows that, at the margin, the trade balance surplus picked up to USD 3.7billion (annualized) in May, from the USD 1.1 billion annualized surplus recorded in 1Q17,as mining exports return to normality.Afurther improvement of the trade balance in the months ahead is expected.

The recovery of copper exports supported improved export performance in May. Copper exports grew 12.0% year over year, following the 1.8% decline and 3.3% increase in March and April, respectively. Hence, total exports increased 10.7% year over year (-0.9% in April). In the quarter ending in May, total mining exports increased 7.6% from last year (5.2% in 1Q17 and 11.0% in 4Q16), while industrial exports rose 6.5% (10.1% in 1Q17). As a result, total export growth was 5.3%in the quarter, broadly stable from the 4.7% increase in 1Q17.

Consumer goods continue to drive import growth, in spite of loosening labor market and weak activity. Total imports grew 8.5% year over year in May (5.9% in April) as capital goods imports remain a drag (-5.4% vs. -11.4% in April), while consumer goods are growing at double digit rate across all divisions. In the quarter ending in May, total imports grew 9.0%, down from the 12.2% in 1Q17. Vehicle imports remain robust (+45%), while semi-durable clothing and apparel,as well as non-durable goods imports,are also performing well (24.3% and 23%, respectively). Capital goods imports declined 7.1% in the quarter (-1.0% in 1Q17), pulled down some transport components, while imports of machinery for mining and construction continue to grow but at a slower pace (9.7% vs. 21.4% in 1Q17).

The current account deficit is set to remain comfortably low. As internal demand stays weak and mining exports rebound, we expect the current-account deficit to remain broadly stable from last year at 1.2%of GDP.


Miguel Ricaurte

Vittorio Peretti


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