Itaú BBA - COLOMBIA – Weaker imports, but still a wide trade deficit

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COLOMBIA – Weaker imports, but still a wide trade deficit

Dezembro 18, 2019

With domestic demand still upbeat, and global growth low, we expect the current account deficit to remain wide ahead

The trade balance recorded another deficit in October. The trade deficit came in at USD 813 million in October, closer to our USD 780 million deficit forecast than the Bloomberg market consensus (USD -892 million), and narrower than the USD 1.2 billion deficit one year ago. Hence, the corresponding 12-month rolling trade deficit narrowed mildly from the USD 10.5 billion recorded as of September to USD 10.1 billion at the end of October, but still wider than the USD 8.6 billion deficit as of June. Meanwhile, our own seasonal adjustment shows the deficit edged down in the quarter ending in October (to USD 11.5 billion, annualized), from the USD 12.6 billion recorded in 3Q19, mostly due to narrowing non-energy component.

Imports contracted during the month. Total imports (FOB) declined 16.4% yoy (+3.3% in September), the sharpest drop since October 2016. In the quarter ending in October, imports fell 2.9% yoy from +5.1% in 3Q19 (2.5% in 2Q19). Capital goods fell 7.2% in the quarter (6.5% in 3Q19), while intermediate goods dropped 1.7% from +4.3% in 3Q19. On the other hand, consumer goods import growth slowed to 2.0% (+6.2% in 3Q19). At the margin, imports fell 9.5% qoq/saar in 3Q19, from +1.0% in 1Q19 dragged by capital goods imports.

Exports in October contracted at a double-digit rate for the fourth consecutive month as coal and oil exports remain a significant drag. Total exports contracted 11.9% yoy, similar to the prior months with coal exports shrinking 38.0% yoy (-13.2% in September), mostly affected by lower prices. Additionally, oil exports shrunk 18.7% yoy (-28.1% previously) hampered by falling prices. In the quarter ending in October, exports fell 12.0% (11.5% fall in 3Q19), with the double-digit commodity drag only partly offset by the 4.7% growth of non-traditional exports (sales excluding oil, coal, coffee and ferronickel). At the margin, exports declined 16.9% qoq/saar, some moderation from the 29.3% drop in 3Q19 (+3.8% in 2Q19) due to a milder drop from commodity sales. 

With domestic demand still upbeat, and global growth low, we expect the current account deficit to remain wide at around 4.5% of GDP for both this year and the next
 

Miguel Ricaurte Carolina Monzón



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