Itaú BBA - COLOMBIA – Trade deficit narrowing in January to be short-lived

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COLOMBIA – Trade deficit narrowing in January to be short-lived

Março 19, 2020

Amid the recent terms-of-trade collapse and the global scenario deterioration, Colombia’s external imbalances will likely endure ahead.

Double-digit export growth amid stable imports led to a trade deficit correction in the first month of 2020. The USD 690 million deficit, close to the Bloomberg market consensus of USD 650 million and our USD 624 million estimate, showed some narrowing from USD1.0 billion deficit recorded in January last year. As a result, the 12-month rolling trade deficit inched down to USD 10.4 billion from USD 10.8 billion in December. Meanwhile, the annualized trade deficit (using our seasonal adjustment) narrowed from the USD 12.4 billion deficit in 4Q19 to USD 11.6 billion in the quarter ending in January. The improvement at the margin came from an export recovery in the energy component. With oil prices plummeting in the subsequent months, the improved trade dynamics is not exp ected to persist.

Import growth remained subdued at the start of the year. Total imports grew 0.6% yoy (2.5% drop in December), and gained 1.6% yoy in the quarter ending in January (4.7% fall in 4Q19). Capital goods imports led the quarterly gain (5.6% vs. -5.3% in 4Q19), boosted by transportation and agriculture equipment. Additionally, consumer goods imports expanded 4.9% from 0.0% in 4Q19, as durable and non-durable goods accelerated in the quarter. Meanwhile, intermediate goods imports remained a key drag falling 2.9% (-7.0% in 4Q19). At the margin, imports recovered to 8.4% qoq/saar, from the 7.5% decline in 4Q19, lifted by transportation equipment.

Export growth was driven by a coal sales recovery. Total exports grew 11.7% yoy, following seven consecutive months of declines, with coal posting a considerable recovery (+81.1% yoy from 41.5% drop in December), mostly boosted by higher volumes. Additionally, oil exports increased 5.4% yoy (+6.5% previously) aided by prices. In the quarter ending in January, the export drop moderated to 1.2% from the 8.7% fall in 4Q19, while there was a 2.3% increase of non-traditional exports. At the margin, exports picked up to 17.5% qoq/saar, from the 4.5% fall in 4Q19 due to accelerating traditional exports.  

Amid the recent terms-of-trade collapse and the global scenario deterioration, Colombia’s external imbalances will likely endure ahead. Lower oil prices and a weak external demand would be partially countered by a faltering internal demand.

 

Miguel Ricaurte
Carolina Monzón

 



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