Chile, the world's top copper producer, posted its largest trade deficit in August since the height of the global financial crisis nearly four years ago, as exports of the metal slipped below the $3.0 billion mark for the first time since June 2010. Chile's trade deficit of $843 million in August was far wider than the $95 million gap in July and contrasts with a year-earlier surplus of $490.7 million, the central bank said on Friday. August's trade deficit is the largest since October 2008.
Exports totalled about $5.886 billion in August, while imports were about $6.728 billion. "The global scenario is undoubtedly affecting export volume," said Mario Arend, chief economist at Celfin Capital in Santiago, citing falls in the key mining, industrial and agricultural sectors. Conversely, imports remain solid on the back of strong domestic demand.
With its small, export-dependent economy, Chile has been bracing for a slowdown because of ebbing global demand. So far this year, though, its economy has posted brisk growth due to a tight labour market as well as robust buying at home. But dwindling demand from top metal consumer China and the euro zone's debt woes are likely to hit more strongly in the second half of this year, the government has said. Still, the central bank is expected to hold its key rate at 5.0 percent in the short-term as it juggles global uncertainty and a strong local economy. Copper export revenue totalled $2.955 billion in August, shrinking from $3.281 billion in July, the bank said.
COMEX copper for December delivery rose nearly 1 percent in August. Copper exports from Chile, which produces about a third of the world's output of the metal, account for around half of the Andean country's export revenue. Chile's consumer price index rose in August, the first monthly increase since April, stoked by higher costs of foods, beverages, rent, utilities and fuel, government statistics agency INE said separately on Friday.
The CPI increased 0.2 percent in August. It was unchanged in July, fell in June and was also unchanged in May. August's CPI gain was a whisker below a 0.3 percent rise forecast in a Reuters poll. Core CPI, which excludes fruits, fresh vegetables and fuel, fell 0.2 percent in August, and inflation in the 12 months to August was 2.6 percent, just below the central bank's 3 percent policy target. The INE said eight of the 12 components of the consumer basket it measures posted increases in August.