Chile’s exports are expected to have recovered in the month of July. Last year, the trade surplus dropped to nearly half of the 2014 level due to the quickening fall in exports that dropped 17 percent year-on-year on average.
The rate of slowdown in exports has decelerated in 2016, with exports still declining more rapidly than imports. Exports had dropped severely in June following a sharp rise in May, resulting in a trade deficit of USD 33 million. However, exports are likely to have recovered in July, dropping 1.3 percent year-on-year, noted Societe Generale in a research report.
“Based on our forecast of a decline in exports of 1.3 percent yoy and a decline in imports of 1.0 percent yoy, we expect the July trade balance (SG: - $397m) to be almost equal to that of July 2015 (- $390m)” added Societe Generale.
In 2012 and 2013, the current account balance was pushed down by low commodity prices to all-time lows of -3.7 percent of GDP and -3.6 percent of GDP respectively as growth in export collapsed.
The consequent worsening in domestic demand, especially investment, resulted in a more severe drop in imports in 2014, aiding the current account balance to rebound markedly to -1.3 percent of GDP.
Growth of import continued to be under pressure even if exports fell at a quicker rate last year and led to the current account balance deteriorating again to -2 percent of GDP. Subdued external and domestic demand is expected to impact trade activities in 2016, thereby hurting the possibility of any significant economic recovery, according to Societe Generale.
