Itaú BBA - CHILE – Trade balance improves at the margin in January

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CHILE – Trade balance improves at the margin in January

February 7, 2019

We expect the current account deficit to remain broadly stable from last year, contained by low oil prices

Low oil prices aided a hefty trade surplus at the start of the year. Weak consumption-related imports also helped, while capital imports are robust and in line with other indicators that show solid investment. Export growth is mild, still hampered by falling mining exports. Overall, a trade surplus of USD 1.0 billion was posted in January, broadly in line with the Bloomberg market consensus but larger than our USD 750 million call. The rolling 12-month trade surplus was USD 5.3 billion surplus (USD 5.4 billion in 2018, USD 7.9 billion in 2017). Our seasonally adjusted series shows a similar USD 5.6 billion (annualized) trade surplus in the quarter ended in January, improving from USD 4.0 billion in 4Q18 and USD 4.8 billion in 3Q18, as energy and capital imports moderated at the margin.

Mining exports were a less intense drag in January. Total exports grew 0.6% yoy in January (5.5% drop previously), the first increase since October. Mining exports shrunk 3.3%, far milder than the 12.7% and 11.4% decline in the previous two months. Agricultural shipments led export growth with a gain of 7.3%, while industrial exports increased 2.0%. In the moving quarter, total exports fell 2.8% yoy (-0.8% in 4Q18 and +0.4% in 3Q18), as mining exports declined 9.7%. At the margin, exports fell 9.9% qoq/saar, following a 5.5% rise in 4Q18 (-11% in 3Q18), affected by a sharp agriculture export slowdown.

Total imports continued to grow in January, but energy imports slowed further. Energy imports dropped 7.0% yoy, the second consecutive month of decline (-3.1% previously), after a 24-month period of increases. Consumption imports fell 0.1% (-0.9% previously) dragged by the durable component, hinting at a slowdown in consumption. Meanwhile, capital imports remain strong (17.7%), consistent with recovering investment. In the moving quarter, imports grew 3.5%, slowing from 10.9% in 4Q18 and 14.6% in 3Q18, with the moderation headlined by energy and consumption imports, while capital imports also decelerated. At the margin, imports fell 24.5% qoq/saar, down sharply from the 10.5% rise in 4Q18, as energy imports led an overall slowdown.

We expect the current account deficit to remain broadly stable from last year, contained by low oil prices. We estimate a deficit of 2.7% of GDP for this year, an increase from the 1.5% deficit recorded in 2017.
 

Miguel Ricaurte
Vittorio Peretti



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