The trade balance in January revealed a USD 4.6 billion deficit, worse than Bloomberg’s market consensus of a USD 3.8 bn deficit. As a result, on a 12-month rolling basis, the trade deficit reached USD 8.6 bn, from USD 8.2 bn in 2024 and USD 5.5 bn in 2023. At the margin, using three-month annualized seasonally adjusted figures, the trade balance stood at a deficit of USD 12.5 bn in January. Looking at the breakdown, the oil trade balance deficit continued to deteriorate at the margin (USD 17.2 bn deficit vs USD 3.8 bn surplus for non-oil) following the decline in domestic oil production and the government strategy to prioritize domestic oil refinery.
Our view: A weaker currency along with expectations of outperformance of the U.S. economy should continue to provide some support to manufacturing exports during the upcoming months. Weaker internal demand and a deceleration of construction should curb non-energy consumption and capital imports used mainly for non-residential projects. Institutional uncertainties and tariff threats will also adversely impact trade flows ahead.
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