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Imports fall as domestic demand weakens.
21/06/2023 | Vittorio Peretti & Carolina Monzón

The trade deficit in April rose to USD 0.9 billion, widening by USD 0.5 billion over one year. The deficit was in line with the Bloomberg market consensus and our call. As a result, the rolling 12-month trade deficit reached USD 13.6 billion, narrowing from the USD 14.5 billion deficit recorded in 2022 (USD 15.3 billion in 2021). Total imports (FOB) contracted 21.1% yoy (14.5% decline in March) dragged by consumption and intermediate goods, while exports contracted 31.5% yoy in April (-6.6% fall in March). At the margin, the quarterly seasonally adjusted trade deficit reached USD 11 billion (annualized), narrowing from USD 12.1 billion recorded in 1Q23 (USD 12.0 billion in 4Q22).


Imports continue to fall sequentially as domestic demand weakens. Total imports (FOB) during the fourth month of the year contracted 21.1% yoy (14.5% down in March), with broad based large declines across several categories. Fuels fell by 41.4% yoy, transport equipment by 31.9% yoy, and consumption goods by 15.4%. In the quarter ending in April, imports contracted 15.4% yoy (-10.4% in 1Q23 and +1.2% in 4Q22). Imports excluding fuels and transportation equipment fell 17.3% yoy (14.9% contraction in 1Q23; -8.5% in 4Q22). At the margin, we estimate that imports fell 14.5% qoq/saar, (-9.9% in 1Q23 and -47.8% in 4Q22). 


Commodities drag exports down in April. Exports fell 31.5% yoy (-6.6% in March). The oil drag persisted (34% yoy, -40.1% in March) as both prices and volumes declined. Moreover, coal exports contracted 58.8% yoy, the first contraction since August 2021. Exports excluding traditional goods (oil, coal, coffee and ferronickel), accounting for 44.3% of exports, contracted a milder 6.1% yoy (+5.0% in March). In the quarter ending in April, exports contracted 15.2% yoy (from -4.7% in 1Q23; +7.3% in 4Q22). At the margin, exports contracted 15% qoq/saar (13.1% decline in 1Q23; 35.9% down in 4Q22). 


The current-account deficit should narrow in 2023 as domestic demand weakens and remittances increase. We expect a CAD deficit of 4.4% of GDP (6.2% in 2022).