Itaú BBA - CHILE – Trade balance still affected by social unrest in November

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CHILE – Trade balance still affected by social unrest in November

Dezembro 9, 2019

The expected internal demand collapse will lead to a swift narrowing of the current account balance next year.

The trade balance recorded an USD 111 million surplus in November, as both exports and imports moderated the contraction from one year before. Amid on-going (but fading) protests trade flows failed to fully recovery. The accumulated 12-month trade balance narrowed to USD 3 billion (USD 4.7 billion in 2018), and our own seasonal adjustment points at a lower trade balance surplus of USD 1.7 billion annualized (USD 4.6 billion in 3Q19) as the double digit fall in exports exceeded the contraction in imports. We reinforce the current data is more a reflection of the activity disruptions, rather than that of changing fundamentals (lower expected growth ahead).

Exports fell 12% YoY in November, moderating the contraction recorded in the midst of protests in the previous month (-20.7% YoY). The industrial and mining components led the fall, but agricultural products also retreated. In the quarter ended in November, exports fell 13.2% YoY (-5.2% in 3Q19), led by mining and industrial shipments, making this the worst showing since mid-2014 when copper prices fell sharply. At the margin, exports shrunk 19.4% QoQ/SAAR (+1.1% in 3Q19), amid double digit falls in all components.

Likewise, the import contraction was 8.3% YoY from the -19.3% recorded in October. In the quarter ended in November, imports (FOB) retreated 12.3% YoY (-5.9% in 3Q19) amid a generalized retreat. At the margin, imports fell 5.1% QoQ/SAAR (-4.7% in 3Q19).

The expected internal demand collapse amid a broadly favorable external scenario will lead to a swift narrowing of the current account balance next year, from our forecast of a 2.9% of GDP deficit in 2019. While stable copper prices favor exports ahead, lower domestic demand growth will limit imports in coming quarters.
 

Miguel Ricaurte
Vittorio Peretti



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