Itaú BBA - CHILE – Smaller-than-expected trade surplus in May

Macro Latam

< Volver

CHILE – Smaller-than-expected trade surplus in May

junio 7, 2019

With reduced global demand and low copper prices ahead amid the escalating trade war, there are upside CAD risks

A seventh consecutive trade surplus was recorded in May, yet the rolling 12-month balance continues to gradually narrow as both mining and industrial exports shrink (symptoms of weakening global demand). A USD 371 million trade surplus was registered in May (USD 415 million one year earlier), below our USD 500 million call and the USD 572 million Bloomberg market consensus. As a result, the rolling 12-month trade surplus dropped to USD 3.7 billion (USD 4.7 billion in 2018, USD 7.4 billion in 2017). Our seasonally adjusted series shows a USD 4.8 billion (annualized) trade surplus in the rolling quarter, down from USD 5.1 billion in 1Q19 when copper prices were higher.

CH_2_trade.png

For the fourth consecutive month, all three export divisions (mining, agriculture and industrial) contracted. For the month of May, total exports dropped 2.3% yoy (-6.3% in April), while also falling at the margin. For the quarter ended in May, total exports contracted 3.9% yoy (in line with performance in 1Q19), as mining fell 4.3% (-5.4% in 1Q19) and industrial exports dropped 2.3% (-1.9% in 1Q19). At the margin, exports fell 0.5% qoq/saar, moderating from the 11.0% drop in 1Q19, as recovering mining exports (given the passing of supply shocks) offset weak external sales of manufactured goods.

Imports declined 1.7% in May (-4.3% previously), as recovering energy imports failed to offset weaker consumer and capital goods imports. As imports of capital goods dropped for the second time in the last three months, the investment moderation seen in 1Q19 (led by machinery and equipment) is likely persisting. Overall, for the quarter ended in May, total imports dropped 3.0% yoy (+2.3% in 1Q19). The weakness in the quarter was led by the 6.8% drop of consumption goods imports (-4.5% in 1Q19), particularly due to the durable goods component. Capital goods imports fell 4.1% yoy (+2.5% in 1Q19), while energy imports recovered with growth of 3.0% (-0.5% in 1Q19). At the margin, imports fell 10.3% qoq/saar, following a 24.0% decline in 1Q19.

With reduced global demand and low copper prices ahead amid the escalating trade war, there are upside risks for our 3.0% of GDP current account deficit forecast (3.1% in 2018). 

 

Miguel Ricaurte
Vittorio Peretti



< Volver