COLOMBIA – Another large trade deficit in May

With blockades lifted in June, exports and imports are both likely to rebound

Vittorio Peretti & Carolina Monzón

19/07/2021


A trade deficit of USD 1.0 billion was recorded in May, USD 0.5 billion larger than the deficit last year (a similar annual increase to that registered in April). The trade deficit was in line with the Bloomberg market consensus, while larger than our USD 0.8 billion call. During the month of May, transportation difficulties amid the protest action contained both export and import dynamics. Imports rose 51.5% YoY, similar to the rise in April, despite encountering the lowest base of comparison from last year. Meanwhile, export gains moderated (+39.4% yoy vs. 59% in April). The rolling 12-month trade deficit sits at USD 11.5 billion, wider than the USD 10.6 billion in 1Q21 (USD 10.1 billion as of December). At the margin, the quarterly trade deficit widened to USD 14.5 billion (annualized) from USD 11.9 billion in 1Q21. With blockades lifted in June, exports and imports are both likely to rebound.

Overall, the import recovery from last year is broad-based with all three divisions (consumer, intermediate and capital) increasing by just over 50% in May. During the quarter ending in May, imports grew 45.4% YoY, improving from the 5.2% increase in 1Q21. Capital goods imports accelerated to 54.5% YoY, from the +8.1% in 1Q21, while intermediate goods increased 43.8% (+11.1% in 1Q21). Consumer goods imports were up 42.4% YoY (4% fall in 1Q21). At the margin, we estimate that imports gained 70.4% qoq/saar, building on the 53.2% rise in 1Q21 (despite a 6% fall from April). 

In May, exports grew 39.4% YoY, moderating from 58.9% in April despite higher terms of trade. Oil exports rose 120.6% YoY, building on the 108.4% increase in the previous month, as price gains remained upbeat (while volumes still dipped). Exports excluding traditional goods (oil, coal, coffee, and ferronickel), accounting for around a half of shipments abroad, increased 24.7% YoY (54.5% previously). In the quarter ending in May, exports grew 44.7% YoY (+1.5% in 1Q21; -14.6% in 4Q20), while at the margin, they expanded by 49.2% qoq/saar, moderating from the 86.4% rise in 1Q21.  

We expect a current account deficit this year at 3.9% of GDP, wider than last year’s 3.4%. A gradual internal demand recovery and increased income deficit would offset the positive effect on exports of higher terms-of-trade and an extenal demand recovery.  

Vittorio Peretti 
Carolina Monzón