Chile’s exports likely to have recovered in August

Chile’s exports are expected to have rebounded in August. Last year, the country’s trade surplus declined to nearly half of its 2014 level due to a rapid fall in exports that were down 17 percent year-on-year on average. In 2016, the rate of decline in exports has decelerated to about 9 percent year-to-date on average.

According to a Societe Generale research note, exports are likely to have improved 0.7 percent year-on-year in August; however, the trade deficit is expected to have come in wide at USD 327 million. Meanwhile, imports are expected to have dropped 0.6 percent in annual terms.

Low commodity prices had pushed down the current account balance to -3.7 percent of GDP in 2012 and -3.6 percent in 2013 as growth in export collapsed. The consequential deterioration in domestic demand, especially investment, resulted in an even sharper drop in import in 2014, assisting the current balance to rebound noticeably to -1.3 percent of GDP.

Growth in import continued to be under pressure, although exports dropped at a much more rapid pace last year and ultimately resulted in the current account to deteriorate again (-2 percent of GDP). Weakness in both external and domestic demand is expected to impact trade activities in the near term, thereby denting prospects of any significant economic recovery, added Societe Generale.