The trade balance posted a deficit of USD 0.6 billion in February, below the market consensus of a deficit of USD 1.4 billion (as per Bloomberg). On a 12-month rolling basis, the trade deficit reached USD 4.4 billion in February (from a deficit of USD 5.7 billion in January and a deficit of USD 5.5 billion in 2023). The result is explained by a smaller energy trade deficit more than offsetting a narrower non-energy surplus. At the margin, using three-month annualized seasonally adjusted figures, the trade balance stood at a deficit of USD 1.0 billion in February (from a surplus of USD 6.4 billion in 4Q23). Looking at the breakdown, manufacturing exports improved expanding 4.5% MoM/SA in February, but momentum remained soft (qoq/saar of 0.2%). Non-energy imports expanded at a stronger pace in February by 7.1% (qoq/saar of 3.4%), supported by consumption, intermediate and capital imports.
Our view: The trade balance figures suggest some improvement in activity indicators in February as reflected by the expansion in manufacturing exports and non-energy consumption & capital imports, after a surprisingly weak monthly GDP print in January which is hard to square with an expansionary fiscal stance concentrated in 1H24 and the strong labor market. Our trade deficit forecast for 2024 stands at USD 17 billion, which implies a trade deficit widening from February’s 12-month rolling figure of a deficit of USD 4.4 billion. While manufacturing exports will remain supported by a still favorable external demand, non-energy imports will be driven by a resilient internal demand amid an expansionary fiscal stance. A strong currency will also likely pressure a wider trade deficit.
See detailed data below
