Itaú BBA - COLOMBIA – Trade deficit in 2019 widened to a three-year high

Macro Latam

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COLOMBIA – Trade deficit in 2019 widened to a three-year high

Fevereiro 17, 2020

We expect the CAD was close to 4.5% of GDP last year (3.9% in 2018).

Another trade deficit (the 24th consecutive negative balance) was recorded at the close of last year. The USD 0.5 billion deficit in December was similar to the one posted one year earlier (an improvement from previous months as oil exports improved and fuel imports slowed), and broadly in line with market expectations. The USD 3.0 billion trade deficit in 4Q19 was USD 0.3 billion larger than the one registered in the final quarter of 2018, resulting in a widening from USD 7.0 billion in 2018 to USD 10.8 billion last year. The widening was almost entirely due to a smaller energy surplus as commodity exports languished. At the margin, the annualized trade deficit (using our seasonal adjustment) was USD 12.2 billion in 4Q19, but did moderate from USD 0.3 billion from 3Q19 as imports decelerated and oil sales fell by less. 

Imports declined in the final quarter of 2019, in part due to low fuel prices and a weakened COP. Total imports (FOB) fell 2.6% yoy in December (+6.5% previously), resulting in 4.8% drop in 4Q19 (+5.1% in 3Q19), the first quarterly fall since 4Q17. All of the three key import categories posted retreats at the backend of 2019, with intermediate goods imports leading the decline (7.0 yoy in 4Q19 vs. +4.3% in 3Q19). Manufactured goods dragged intermediate imports down along with a significant moderation of fuels imports (to 5.1% yoy vs. large double-digit growth rates in the prior four quarters). Capital goods also deteriorated with a fall of 5.3% (+6.5% in 3Q19) and even after excluding the volatile transportation equipment, capital goods imports decelerated sharply (1.3% drop vs. +6.0% in 3Q19). Despite the high-flying retail sales and credit growth, imports of consumer goods were flat from 4Q18 (+6.2% in 3Q19), dragged by the durable component. At the margin, imports fell to 8.8% qoq/saar, losing momentum from 3Q19 (+0.8% qoq/saar). Overall, imports moderated to 2.7% in 2019, from 11.3% in 2018, as all divisions slowed-down sharply.

Recovering oil sales led to a milder export decline in December, but commodity exports were the key drag last year. Total exports contracted 1.9% yoy in the final month of 2019, a notable improvement from the double-digit drops in the prior five months. The headline recovery was led by the first growth of oil exports (boosted by prices rather than volumes) since June. In final quarter of 2019, exports fell 8.6% yoy (-11.5% in 3Q19). At the margin, exports fell 8.8% qoq/saar, recovering from 29.0% fall in 3Q19, aided by an improvement of oil and coal exports. During 2019, exports declined 5.9%, a notable turnaround from the 10.2% rise in 2018 (and the worst performance since 2016) as global demand moderated and commodity prices faltered.

We expect the CAD was close to 4.5% of GDP last year (3.9% in 2018) and to remain near that rate this year as weak global trade growth amid robust domestic demand are likely to keep external accounts under pressure. 


Miguel Ricaurte
Carolina Monzón

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