Itaú BBA - COLOMBIA – Wider-than-expected trade deficit in April

Macro Latam

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COLOMBIA – Wider-than-expected trade deficit in April

junio 21, 2019

Due to the transitory uptick in imports, further widening of the trade deficit is not expected

The rolling 12-month trade deficit continued to rise as of April, despite a consolidating recovery of oil exports. In the first month of 2Q19, a trade deficit of USD 460 million was recorded, broadly in line with the market consensus, but larger than our USD 345 million forecast and the USD 257 million deficit recorded in April last year. As a result, the trade deficit widened from USD 7.1 billion in 2018 to USD 8.4 billion (USD 8.2 billion as of March). Still elevated capital and intermediate import growth is offsetting mild export gains. At the margin, the trade deficit is at a lower USD 7.6 billion (annualized) in the quarter, as oil exports accelerated.


Imports growth of 7.7% yoy in April is still elevated (10% in March), but was the slowest gain since April 2018. Imports of consumer goods declined for the first time in more than a year, while intermediate goods imports were sustained by a surge in fuel imports (volume). The latter could be explained by the need for gas in thermo-electric plants amid drops in hydro-generation reservoir levels amid El Niño. On the capital imports side, transport equipment and construction material stayed upbeat, but industrial related imports shrunk for this first time since March last year. In the quarter ended in April, imports slowed to 8.3% yoy (9.4% in 1Q19 and 19.7% in 4Q18). At the margin, we estimate that imports accelerated to 4.3% qoq/saar in the quarter (-5.2% in 1Q19), lifted by fuel imports. Given the reason behind the recent surge in this component, it is likely the acceleration will be short-lived in nature.

Higher oil prices and volumes boosted exports in April. Total exports grew 2.2% yoy in April (0.7% decline in March) as the oil recovery consolidated with growth of 22.2% (21.3% in March). Rising volumes and prices supported the oil export growth. Meanwhile coal was the main drag in the month, contracting 24.7% yoy (-33.7% in March), while coffee exports also posted a double-digit decline. In the quarter ended in April, exports increased 2.4%, the first posit ive print this year (-1.0% in 1Q19, +1.6% in 4Q18), as the oil export improvement offset the persistent coal drag. At the margin, oil drove the total exports acceleration to 33% qoq/saar (-0.6% in 1Q19 and -26.8% in 4Q18).

Overall, as the global scenario becomes more challenging and the terms-of-trade likely deteriorate, the current account deficit could widen to 4.3% of GDP this year (3.9% last year).


Miguel Ricaurte
Carolina Monzón

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