Itaú BBA - CHILE – Imports slow in 1Q19

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CHILE – Imports slow in 1Q19

April 8, 2019

Weakening industrial export dynamics reflect the slowing global economy

In the first quarter of the year, still weak mining exports was offset by a widespread import slowdown. For the month of March, a USD 607 million trade surplus was registered, broadly in line with one year earlier, yet the surplus in the first quarter of the year moderated to USD 1.9 billion (USD 3.0 billion in 1Q18). As a result, the rolling 12-month trade surplus dropped to USD 3.6 billion (USD 4.7 billion in 2018, USD 7.4 billion in 2017). However, our seasonally adjusted series shows a USD 4.4 billion (annualized) trade surplus in the quarter, an improvement from USD 2.5 billion in 4Q18 that was hampered by low global copper prices.

Mining exports remain the key export drag, contracting 7.6% in March, but the industrial dynamics also reflect the slowing global economy. For 1Q19, total exports contracted 5.1% yoy (-0.1% in 4Q18), with all main divisions declining. Mining exports shrunk 9.2% (-6.4% in 4Q18), with the effects of unfavorable weather likely playing a role. Industrial exports declined 1.1% (+10.7% in 4Q18), the first drop since 3Q16 as wood, paper and chemical sales shrink. At the margin, exports fell 14.2% qoq/saar, following a 8.3% rise in 4Q18, affected by a sharp industrial export slowdown and weak copper exports.

Imports shrunk in March (-4.9%) for the first time since October 2016. Declining consumer, capital and energy imports led the deterioration in the month. During 1Q19, import growth slowed to 0.3%, from 23.3% in 4Q18, with the moderation still headlined by energy imports, but capital imports showed its first signs of moderation after various quarter of double-digit growth. We closely monitor the latter as it has been a good predictor of investment dynamism, which is expected to be the activity driver this year. At the margin, imports fell 23.8% qoq/saar, down sharply from the 21.9% rise in 4Q18, hampered by energy and capital import slowdown.

As we expect domestic demand to expand at a decent pace and growth among trade partners moderates, we expect the current account deficit to remain wide this year, at 3% of GDP (3.1% in 2018). 

Miguel Ricaurte
Vittorio Peretti

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