The trade balance showed a deficit of USD 1.2 billion in May, from a surplus of USD 0.4 billion in the same month of 2022. The figure underperformed market expectations of a surplus of USD 0.1 billion, according to Reuters and our expectation of a deficit of only USD 0.5 billion. The 12-month rolling trade surplus narrowed to USD 1.1 billion in May, from USD 6.9 billion in December. At the margin, the seasonally-adjusted annualized balance showed a deficit of USD 10.2 billion in the quarter ended in May (from a deficit of USD 4.0 billion in 1Q23).
Exports declined during the quarter ended in May, affected by severe drought. Total exports decreased by 25.6% yoy in the period, after falling by 18.0% in 1Q23. Agricultural exports, including manufactured agricultural products, plummeted by 34.8% yoy in the quarter (from a drop of 26.1% yoy in 1Q23), led by a drought-related reduction in exports of wheat, corn, and soybean oil. Exports of other industrial products dropped by 6.9% yoy in the period (from a decline of 4.3% in 1Q23), mostly due to smaller shipments of biodiesel. On a sequential basis, exports fell by 29.2% qoq/saar in May, from a decrease of 47.7% in the quarter ended in March 2023.
Imports also declined, but at a slower pace than exports. Total imports decreased by 7.8% yoy in the quarter ended in May (from a drop of 4.3% yoy in 1Q23), but rose 30.4% qoq/saar in the same period (from an increase of 18.7% in 1Q23). Imports of consumer goods (including cars) dropped by 5.0% yoy in the period, while imports of capital goods and parts decreased by 1.5% yoy. Imports of intermediate goods fell by only 0.1% yoy in the period, due to significant imports of soybeans to be processed locally and exported later.
The deficit in the energy trade balance narrowed. The last 12-month deficit fell to USD 3.7 billion in May, from USD 4.9 billion in December 2022. Energy imports decreased by 40.2% yoy in the quarter ended in May, while oil exports fell by 6.1% yoy in the period.
We see downward risk to our trade balance forecast of a surplus of USD 3.5 billion for this year.