Chile’s trade surplus in 2015 dropped to USD 4.1 billion, nearly half of the level seen in 2014, due to drop in exports. In 2015, exports declined 16% y/y on average. In January 2016, the pace of decline in exports continued, dropping about 14% y/y. According to Societe Generale, slowdown in exports has continued to outpace that of imports. However, in February and in March this pattern is expected to have reversed, added Societe Generale.
“Based on our forecast of an exports decline of 5% yoy and an imports decline of 10% yoy, we expect the trade balance in March 2016 (SG: USD986m) to be higher than that of March 2015 (USD768m)”, noted Societe Generale.
In 2012 and 2013, the current account balance declined to an all-time low of -3.7% of GDP and -3.6% respectively as growth in export slowed down. Consequently, domestic demand dropped, especially investment, which resulted in sharper decline in imports in 2014. This greatly helped rebounding current account balance to -1.1% of GDP.
Growth in imports continued to be under pressure; however, exports fell at a more rapid pace in 2015 and consequently resulted in deterioration of current account to -1.6% of GDP again. Weakness in both external and domestic demand is expected to impact trade activities further in 2016, according to Societe Generale. This will hamper the outlook for economic rebound. External balances of Chile are not expected to be at comfortable levels for a longer period of time, added Societe Generale.
