Decline in Chile’s imports likely slowed in April 2016, trade balance to be lower than April 2015 level

Chile’s trade surplus in 2015 had dropped to nearly half of the level of 2014 due to rapid fall in exports, which fell 17% y/y on average. The pace of exports and imports’ deceleration in 2016 has slowed down. Exports are still falling marginally quicker than imports. In the first quarter of 2016, the capital goods imports noticeably recovered and are likely to have continued with the rebound in April, according to Societe Generale. Hence, imports are likely to have dropped 6.8% in last month, added Societe Generale.

“Based on our forecast of an exports decline of 11% yoy and an imports decline of 7% yoy, we expect the trade balance in April (SG: USD614m) to be lower than that of April 2015 (USD941m)”, said Societe Generale.

As gains in export deteriorated, low commodity prices drove down the current account balance to all-time low of -3.7% of GDP in 2012 and -3.6% in 2013.  The consequential fall in domestic demand, especially investment, resulted in sharper decline in imports in 2014. This helped in recovering the current account balance noticeably to -1.1% of GDP.

In 2015, import  growth continue to be under pressure; however exports fell at a more rapid pace and resulted in current account to decline again. Weakness in external and domestic demand is expected to impact trade activities in 2016, therefore affected the prospects of significant economic rebound.