Nader Nazmi, Oscar Munoz - Market Economics
Latam Macro Snapshot | 13 May 2013 20:37 |
The trade balance shifted to a deficit of USD 29mn in Q1 from a surplus of USD 1.5bn in Q4. On a 12-month accumulated basis, Peru’s trade surplus narrowed to USD 3.4bn in March from USD 10.8bn a year ago.
The deterioration in the trade balance is largely due to a substantial weakening in exports growth (Chart 1). Exports contracted for a fourth consecutive month in March (-16.1% y/y) and were 17.1% lower in Q1 than in the first quarter of 2012.
The exports sector has been held back by the ongoing underperformance of traditional exports and, more specifically, the exports of minerals (-22.5% y/y in Q1), which account for 56% of the total. Lower prices for copper and other metal commodity prices have put Peru’s terms of trade on a downtrend (Chart 2), hurting the trade balance.
A stronger PEN has also adversely impacted the trade balance by keeping exports growth in check and supporting imports demand. Although imports growth has decelerated from the double-digit pace of last year, imports continue to reflect buoyant domestic demand. Imports increased 7.0% y/y in Q1. Imports of capital goods and consumer products increased 7.3% y/y and 8.1% y/y in the first quarter of the year.
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