Itaú BBA - CHILE - Smaller trade balance in 2Q17, but external accounts remain solid

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CHILE - Smaller trade balance in 2Q17, but external accounts remain solid

July 7, 2017

Improved consumer and capital imports in 2Q17 led to a smaller trade balance.

In spite of recovering mining exports, improved consumer and capital imports in the second quarter of the year led to a smaller trade balance. The USD 58 million surplus in June (USD 50 million market consensus; Itaú: USD 100 million) came in below the USD 375 million recorded one year ago as consumer goods imports continue to increase. The rolling 12-month trade surplus came in at USD 3.9 billion, inching down from the USD 4.3 billion as of 1Q17 (USD 5.3 billion in 2016). Nevertheless, the trade balance remains at a comfortable level and the mining export recovery is expected to continue (as production recovers with the end of a strike in the sector), while lower global oil prices will aid an increase in the trade balance. Our seasonally adjusted series shows that, at the margin, the trade balance surplus picked up to USD 1.7 billion (annualized) in 2Q17, from the USD 1.1 billion annualized surplus recorded in 1Q17, as mining exports return to normality.

The recovery of copper exports supported improved export performance in the quarter. Copper exports grew 14.2% year over year in 2Q17, following the mild 2.0% rise in 1Q17 amid the extensive mining strike. On the other hand, industrial exports rose 3.6% (10.1% in 1Q17). Hence, total exports increased 7.4% year over year (4.8% in 1Q17). At the margin, exports accelerated to 2.2% qoq/saar from -11.4% in 1Q17, lifted by mining.

Consumer goods imports built on gains made in 1Q17, capital goods imports returned to growth, while intermediate energy imports moderated. In the quarter, total imports grew 11.9%, broadly stable from 1Q17, led by the 23.6% rise in consumer goods imports (19.8% in 1Q17). In spite of a loosening labor market, consumer import strength is widespread, ranging from vehicles to clothing and food products. Capital goods imports increased 2.5% in the quarter (-1.0% in 1Q17), pulled up by machinery imports. As fuel prices decline, energy imports moderated to 22.1%, from 48.6% in 1Q17. At the margin, imports declined 1.8% qoq/saar from +29.4% in 1Q17, pulled down by the energy component.

An improvement of the trade balance in the months ahead is expected. We expect the current-account deficit to stay broadly stable from last year, at 1.2% of GDP.


Miguel Ricaurte

Vittorio Peretti


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