Itaú BBA - CHILE - Large trade surplus persists in April

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CHILE - Large trade surplus persists in April

May 7, 2018

We expect the current account deficit to remain contained this year

Exports continue to outperform imports in Chile. The trade surplus of USD 983 million in April was larger than the USD 597 million recorded one year earlier and superior to our USD 800 million surplus forecast (Bloomberg market consensus: USD 750 million). Elevated mining exports, mainly aided by price, are the principal driver of the trade improvement along with firm global growth. The 12-month rolling trade surplus increased to USD 10.5 billion, from USD 7.9 billion in 2017 and USD 5.4 billion in 2016. Our seasonally adjusted series shows that, at the margin, the trade balance surplus is still high at USD 9.0 billion (annualized) in the quarter, although lower than the USD 9.6 billion in 1Q18 and USD 12.1 billion in 4Q17.

Total exports increased 24.9% in April (18.6% in March), lifted by mining and industrial goods. In the quarter ending in April, the 39.6% mining increase (30.8% in 4Q17) boosted total export growth to 26.3% (17.2% in 4Q17). Industrial and agriculture exports are both growing around 14%, recovering from 5.4% and -23.9%, respectively, in 4Q17. At the margin, exports grew 7.8% qoq/saar, from 10.5% in 4Q17, with an acceleration of agriculture and industrial exports unable to fully offset slowing mining exports.

Capital import growth continued in April, boding well for the anticipated investment recovery this year. Total imports rose 19.6% in April (9.3% in March) as energy goods imports accelerated from 15.2% to 52.3% and consumer imports returned to double-digit growth. Meanwhile, capital goods imports rose 8.4% (6.4% previously), lifted by mining and construction machinery. In the quarter ending in April, total imports increased 14.2% (11.7% in 4Q17) as energy imports tick up to 27.1% (25.6% in 4Q17). Capital goods imports were 7.1% versus 4.5% the final quarter of last year. At the margin, imports increased 17.1% qoq/saar, slower than the 27.7% in 4Q17. The acceleration of capital goods was offset by slowing energy and consumption import growth.

We expect the current account deficit to remain contained this year. Robust copper exports, partly offset by higher energy prices, support our view of a current account deficit similar to the 1.5% of GDP last year.


Miguel Ricaurte
Vittorio Peretti

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