Itaú BBA - COLOMBIA – Low trade deficit in April

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COLOMBIA – Low trade deficit in April

June 20, 2018

Dynamic external demand, still weak domestic growth and higher terms of trade will lead to further improvement in the trade balance

The trade balance deficit continued to narrow in April. The USD 325 million deficit, which was closer to the Bloomberg median estimate (USD -400 million) than to our forecast (USD -182 million), was significantly lower than the USD 1.2 billion deficit recorded one year ago. The corresponding 12-month rolling trade deficit continues to shrink from the USD 6.2 billion recorded in 2017, to USD 4.7 billion at the end of April, explained by a growing energy balance. Meanwhile, our own seasonal adjustment shows the deficit was narrower in the quarter ending in April at USD 4.4 billion annualized from 5.0 billion recorded in 1Q18 but still larger than the USD 1.7 billion deficit in 4Q17 as imports remained dynamic, while exports slowed down.

Imports were robust in April. Total imports (FOB) grew 5.1% from last year, after contracting 5.3% in March. The improvement in consumer goods (+25.9% YoY) led the expansion, while capital goods imports contracted (-2.6%). In the quarter ending in April, imports were broadly flat from one year before (-0.1%), but improved from 4Q17 (-2.2%), with dynamic consumer imports (+7.3%) compensated by lower intermediate and capital goods imports. Fuel imports (-32.3%) as well as transportation equipment (-23%) were the main drag in the quarter. Sequentially, imports (FOB) slowed down from 48.0% qoq/saar in 1Q18 to 28.6% in the quarter ended in April, but still improved from the -4.3% in 4Q17. Capital goods and consumer goods imports more than offset falling intermediate goods imports (pulled down by fuels).

Coal and oil drove exports in April. Total exports growth in April was 38.5% year-over-year from 1.4% in March. The oil sector remained robust at the beginning of the 2Q18 expanding 24.6%, the highest growth rate in 2018, while coal exports more than doubled from one year earlier (13.9% previously). Additionally non-traditional goods (exports excluding coal, coffee, oil and ferronickel) grew 29.9%, the best outcome since July 2017. Meanwhile coffee exports dropped 5.4% (-31.5% previously) accumulating six months of declines. In the quarter ending in April, exports rose 15.7% (compared to 9.9% 1Q18 and 13.6% 4Q17). At the margin, total exports grew 4.9% qoq/saar (10.1% in 1Q18 and 35.6% in 4Q17). 

Dynamic external demand, still weak domestic growth and higher terms of trade will lead to  further improvement in the trade balance this year. Correspondingly, we expect a current account deficit of 2.9% of GDP (3.3% last year).


Miguel Ricaurte
Carolina Monzón 

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