Itaú BBA - CHILE – Mining recovery boosts February trade surplus

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CHILE – Mining recovery boosts February trade surplus

March 7, 2018

We expect Chile’s external imbalances to stay low.

Chile posted another large trade surplus in February, keeping Chile’s current account deficit low. In February, the trade balance recorded a USD 1.25 billion surplus, falling in between the Bloomberg market consensus of USD 1.1 billion and our USD 1.5 billion forecast. Smaller industrial and agricultural exports explain our surprise. Nevertheless, the trade surplus far exceeded the USD 0.2 billion posted one year ago, led by mining as prices and volume recover, but there was a generalized export improvement. As a result, the 12-month rolling trade surplus increased to USD 8.5 billion, from USD 6.9 billion in 2017 and USD 5.3 billion in 2016. Our seasonally adjusted series shows that, at the margin, the trade balance surplus ticked up to a sizable USD 10.2 billion (annualized) in the rolling quarter (USD 10.1 billion in 4Q17). Elevated copper prices and firm global growth are supporting the favorable trade balance results, offsetting – so far – the stronger exchange rate and recovering internal demand. 

Mining drove exports in February. Total exports gained 36.4% over twelve months (from 19% in January), with mining exports gaining 53.4% (9.3% one month earlier). A low base of comparison due to the extensive labor strike early last year favors mining export growth. Agriculture exports rose 38.8% year over year (59.5% in January), while industrial exports posted growth of 15.2% (17.1% previously). In the rolling quarter, exports grew 19.8% year over year, up from 15.4% in 4Q17 and in line with the performance in 3Q17. Mining growth in the quarter is 28.1% (26.7% in 4Q17). At the margin, exports accelerated to 19.3% qoq/saar, from 9.6% in 4Q17, mainly explained by the industrial component.   

Import growth remains elevated, rising 14.3% in February (11% in January). Consumer and energy imports are the main drivers, while capital goods imports returned to growth for the first time since November. Total consumer goods increased 15.1% (19.0% previously), with the slowdown attributable to the durable and semi-durable components. With the high international fuel prices, energy imports increased 17.1%, up from 13.2% in January. Meanwhile, the recovery of capital goods imports to 6.6% (-5.5% previously) is due to buses and electronics. In the rolling quarter, imports increased 10.9% year over year, from 11.9% in 4Q17 and 7.1% in 3Q17. Consumer goods grew 15.1%, broadly stable from the previous two quarters, while energy import growth is less of a driving force (12.7% vs. 25.6% in 4Q17). Meanwhile, capital goods imports contracted 1.6% (+3.9% in 4Q17 and +8.0% in 3Q17) as purchases of transportation items moderate. However, imports of other machinery improved in the quarter with growth of 17.4% (6.4% in 4Q17 and 5.6% in 3Q17), an encouraging sign for the expected investment recovery. At the margin, imports increased 29.1% qoq/saar, a similar pace recorded in 4Q17. Accelerating consumption goods have offset slowing energy import growth. 

We expect Chile’s external imbalances to stay low. We expect the current account deficit to narrow to 1.2% of GDP, from the 1.5% estimated for 2017.


Miguel Ricaurte
Vittorio Peretti

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