The trade balance showed a deficit of USD 0.6 billion in July, slightly greater than the USD 0.5 billion deficit in July of 2022. The deficit was in line with market expectations, with analysts surveyed by Reuters estimating a deficit of USD 0.6 billion. The 12-month rolling trade balance deteriorated slightly to a deficit of USD 0.6 billion in July, from a deficit of USD 0.4 billion in June. At the margin, the seasonally adjusted annualized balance fell from a deficit of USD 12.7 billion in 2Q23 to USD 10.5 billion in the quarter ended in July.
Exports declined in the quarter ended in July, affected by the severe drought. Total exports declined by 27.4% yoy in the quarter, after a drop of 29.6% in 2Q23. Agricultural exports, including manufactured agricultural products, plummeted by 34.0% yoy in the quarter (from a drop of 36.4% yoy in 2Q23), led by a drought-related reduction in exports of wheat, corn and soybean oil. Exports of other industrial products fell by 16.2% yoy in the period (from a similar decline in 2Q23), mostly due to reduced shipments of biodiesel. On a sequential basis, exports fell by 27.1% qoq/saar in July, from -27.6% in 2Q23.
Imports were also down in the same quarter due to controls and weak activity. Total imports fell by 14.4% yoy in the quarter ended in July (from -11.9% yoy in 2Q23), down by 11.8% qoq/saar in the period (from +14.7% in 2Q23). Imports of consumer goods (including cars) dropped by 5.7% yoy in the period, while imports of capital goods and parts increased by 1.5% yoy. Imports of intermediate goods fell by 4.7% yoy in the period.
The energy trade deficit narrowed significantly. The rolling 12-month deficit narrowed to USD 1.5 billion in July from USD 3.0 billion in June. Energy imports decreased by 49.4% yoy in the quarter ended in July, while oil exports fell by 6.2% yoy in the period.
Even though imports are falling (due to tighter controls and weaker activity), the large contraction in exports places a downside risk to our USD 1 billion trade surplus forecast for this year.