Phase of improvement in Chile's trade balance is likely over

Except for in January, Chile's exports and imports have contracted in each month on yoy basis and the pace of the trade decline has risen compared with 2014. However, the export deceleration has now outpaced that of imports (at least in dollar terms). 

"As a result, the trade balance's phase of improvement seems to be almost over. With exports declining -16.5% yoy and imports declining -9.5% yoy, the economy is expected to face its first monthly trade deficit, -USD165m, since January 2014", says Societe Generale. 

Low commodity prices pushed the current account balance down to an all-time low of -3.7% of GDP in 2012 and -3.6% in 2013 as export growth collapsed. The resulting deterioration in domestic demand, particularly investment, led to an even sharper fall in imports in 2014, helping the current account balance to improve remarkably to -1.1% of GDP. 

"Import growth has remained under pressure this year and could help a further recovery in the current account this year. However, as mentioned above, this phase is nearly over, and given that growth is expected to stabilise at around 2.5%, the current account improvement should come to a halt", added Societe Generale.