Itaú BBA - CHILE – Weak mining restricts trade surplus in February

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CHILE – Weak mining restricts trade surplus in February

March 7, 2019

As the domestic demand recovery consolidates and growth of trade partners moderates, a mild widening of the CAD is expected

Falling mining exports along with a moderation of the energy import decline and robust capital imports resulted in a smaller-than-expected trade surplus in February. Overall, a trade surplus of USD 276 million was posted, below the Bloomberg market consensus of USD 750 million and our USD 650 million call (USD 1.1 billion surplus one year earlier). As a result, the rolling 12-month trade surplus dropped to USD 4.3 billion (USD 5.4 billion in 2018, USD 7.9 billion in 2017). However, our seasonally adjusted series shows a USD 4.1 billion (annualized) trade surplus in the quarter ended in February, a mild improvement from USD 3.9 billion in 4Q18 that was hampered by low global copper prices.

For the seventh consecutive month, mining exports shrunk. Total exports contracted 12.3% yoy in February (+0.6% previously), with the three main divisions declining. Mining exports shrunk 17.6% (-3.3% previously), with the deterioration possibly arising from the effects of unfavorable weather in the month. Agricultural shipments dropped 12.2% (+7.3% previously), while industrial exports dropped 4.0% (+2.0% previously) led by falling paper and wine sales. In the moving quarter, total exports fell 5.6% yoy (-0.8% in 4Q18 and +0.4% in 3Q18), as mining exports declined 11.7%. At the margin, exports fell 6.4% qoq/ saar, following a 5.9% rise in 4Q18 (-11.4% in 3Q18), affected by a sharp industrial export slowdown.

Total imports continued to grow in February, with still favorable signs for investment. Energy imports moderated its decline to 1.2% yoy (-7.0% previously) as global oil prices recover. Consumption imports grew 3.1% (-0.1% previously), lifted by durable (electronics) and semi-durable (apparel) imports. Meanwhile, capital imports remain strong (14.0% vs. 17.7% in January), lifted by machinery and equipment (consistent with recovering investment) and transportation. In the moving quarter, imports grew 4.2%, slowing from 10.9% in 4Q18 and 14.6% in 3Q18, with the moderation still headlined by energy imports, while capital imports remained robust with double-digit growth. At the margin, imports fell 12.3% qoq/saar, down sharply from the 11.6% rise in 4Q18, hampered by energy and capital import slowdown.

As the domestic demand recovery consolidates and growth of trade partners moderates, we expect a mild widening of the current account deficit from the 2.6% of GDP expected for 2018 (1.5% in 2017).


Miguel Ricaurte
Vittorio Peretti

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