Vittorio Peretti & Carolina Monzón
The trade deficit reaches USD 1.1 billion in November, narrowing USD 0.7 billion from one year earlier. The result came slightly above both Bloomberg market consensus and our call of USD 1.0 billion. Despite flat oil exports, a gradual slowdown in consumer goods and intermediate products imports drove the decline in the trade deficit. As a result, the rolling 12-month trade deficit reached USD 14.5 billion (USD 15.3 billion as of September; USD 15.3 billion in 2021). Total imports (FOB) contracted 6.1% yoy, down from +7.0% in October. Meanwhile, exports rose by 8.8% yoy in November, down from the 11.3% rise in October. At the margin, the quarterly seasonally adjusted trade deficit reached USD 13.7 billion (annualized); smaller than the USD 17 billion recorded in 3Q; (USD 11.6 in 2Q22). Wide twin deficits amid elevated inflationary pressures lead us to expect the tightening cycle to continue latest this month (taking rates to 12.75%).
Consumer goods imports are weakening. Total imports (FOB) contracted 6.1% yoy, down from +7% in October, dragged by consumer goods imports contraction (10.2% yoy), while fuels (+15% yoy) and capital goods for industry (+9.5% yoy) contained the decline. In the quarter ending in November, imports grew 5.5% yoy (32% in 3Q and 38% in 2Q22). Imports excluding fuels and transportation equipment moderated to 0.1% yoy from the 22% expansion in 3Q (31% in 2Q22). At the margin, we estimate that imports fell 42.2% qoq/saar, from the +3.5% registered in 3Q22 (37.5% in 2Q22), dragged by COP weakness and likely pointing to the internal demand slowdown.
Exports moderated in November. Exports rose by 8.8% yoy in November, down from the 11.3% rise in October. Lower export growth was explained mainly by weaker non-traditional items (exports excluding oil, coal, coffee and ferronickel), contracting 1.5% yoy (+5.3% in October). Oil export growth moderated to 0.8% yoy (6% decline in October), as the volume decline eased, while coal sales rose 79.9% (64.5% previously), boosted by prices. During the rolling-quarter ending in November, export growth slowed to 15.1% yoy (41.9% in 3Q22; 69.3% in 2Q22), while at the margin, exports contracted 40% qoq/saar (14% fall during 3Q22).
We expect a CAD of 6.7% of GDP for 2022 (5.7% in 2021). The expected slowdown of domestic demand and COP weakness would support a gradual CAD moderation to 5.0% of GDP this year.