Economic Indicator Briefing - Chile - Current Account

In the third quarter, the current account balance recorded a deficit of US$ 2.3 billion. The reading contrasted the US$ 368 million surplus recorded in the third quarter of last year and came in below the US$ 1.1 billion deficit (previously reported: US$ 1.3 billion deficit) observed in the second quarter.
The figure marks, in fact, the highest quarterly deficit in over a decade. The deterioration of the current account balance was caused by a sharp worsening of the trade balance, which incurred a deficit for the first time in six years. The trade balance recorded a US$ 83 million deficit, which contrasted the US$ 2.9 billion surplus observed in the second quarter.

Exports accelerated slightly, from 0.2% in the second quarter to 3.3%. Imports, however, outpaced exports by a wide margin and added 43.5% over the same period last year (Q2: +44.8% year-on-year).

The strong import growth reflects a notable increase in fuel prices, which added 69.3% over the third quarter of 2007.

On the other hand, the income balance improved notably, from a US$ 5.2 billion deficit in the second quarter to a US$ 2.9 billion deficit.

On an annual basis, the current account reverted from a US$ 1.1 billion surplus in the second quarter to a US$ 1.6 billion deficit. Looking forward, declining oil prices should at least partly compensate for the effect of lower copper prices on the export side.

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