The trade deficit fell to USD 0.7 billion in March, narrowing USD 0.4 billion over one year. The deficit was below the Bloomberg market consensus of USD 1.2 billion and our USD 1.7 billion call. During 1Q24, the trade deficit reached USD 2.5 billion (USD 2.2 billion in 4Q23), driven by double-digit declines in imports. As a result, the rolling 12-month trade deficit reached USD 9.2 billion, down from the USD 14.5 billion deficit recorded in 2022 (USD 15.3 billion in 2021). Total imports contracted by 18.6% yoy (-3.9% in February) dragged by agriculture and manufacturing imports, while exports contracted 14.2% yoy in March (-10.1% in February), driven by a significant coal export drag. At the margin, our seasonal adjustment shows the trade deficit in the quarter rose to USD 9.7 billion (annualized), up from the USD 8.4 billion recorded in 4Q23.
Imports fell sequentially in 1Q24. In the first quarter of the year, imports contracted by double digits again, falling 10.9% YoY (-10.4% in 4Q23). Transport equipment (-32.3% yoy), agricultural goods for industry (-17.7% yoy) and construction materials (-17.6%) were the main drags in the quarter. Imports excluding fuels and transportation equipment fell 7.7% YoY (-12.5% YoY in 4Q23). At the margin, we estimate that imports fell 12.2% qoq/saar (+13.1% in 4Q23).
Commodity exports remained weak. In 1Q24, exports contracted 9.5% YoY (4.6% drop in 4Q23), dragged by double digit decline in ferronickel, coal and fuels. Oil exports in the quarter declined by 1.8% (+6.1% in 4Q23; -6.8% in 3Q23). On the other hand, coal exports contracted by 37.1% (-29.5% in 4Q23). Exports excluding traditional goods (oil, coal, coffee and ferronickel), accounting for the 45.9% of total exports in the quarter, registered an increase of 2.6% (+6.7% in 4Q23). At the margin, exports fell by 23.2% qoq/saar (+18.8% in 4Q; -14.2% in 3Q).
Our take: Contractionary monetary policy and elevated inflation are contributing to the weakening of domestic demand, in turn, supporting a low current account deficit this year (3.0% of GDP in 2024, up slightly from 2.7% in 2023).
