Itaú BBA - COLOMBIA – Wide trade deficit in 1Q19

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COLOMBIA – Wide trade deficit in 1Q19

May 13, 2019

Weaker global economy and some internal demand recovery would prevent a correction of external accounts.

The trade deficit in 1Q19 nearly doubled that registered one year earlier. In the final month of the quarter, a trade deficit of USD 762 million was recorded, broadly in line with our call and market consensus, but larger than the USD 363 million deficit in March last year. As a result, the trade deficit in 1Q19 widened from USD 1.2 billion in 1Q18 to USD 2.4 billion. Slowing oil exports and falling coal exports along with dynamic import demand led the result. Overall, the 12-month rolling trade deficit rose to USD 8.2 billion from USD 7.1bn in 2018 (USD 6.1 billion in 2017). However, at the margin, the trade deficit was stable at USD 10 billion (annualized) in the quarter.

Exports contracted in 1Q19, the first such case since 3Q16. Total exports fell 0.8% year over year in March (+6.2% in February). In 1Q19, total exports contracted 1.0% (+1.6% in 4Q18), dragged by coal exports shrinking by double-digits for the third consecutive quarter. Meanwhile, oil exports slowed to 5.1% yoy (14.8% in 4Q18). At the margin, exports continued to fall but at a slower pace (-6.2% qoq/saar vs. -12% in 4Q18) as the oil export decline moderated. 

Despite the double-digit year over year import increase in March, there was a slowdown at the margin. Total imports (FOB) grew 10.0% yoy in March (7.9% in February) lifted by consumer and capital goods. In the first quarter of the year, imports slowed but still grew by a strong 9.4% yoy (19.7% in 4Q18). Nevertheless, at the margin, we estimate that imports declined 5.2% qoq/saar in 1Q19 (+30.7% in 4Q18), indicating that the internal demand recovery is still fragile.  

We see a wide current account deficit of 4.1% of GDP in 2019 (3.8% last year). The weakening global economy and some internal demand recovery would prevent a correction of external accounts.
 

Miguel Ricaurte
Carolina Monzón


 



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