expectations (USD0.1 and 0.7bn, respectively). On a 12-month sum basis, the trade deficit declined modestly to USD1.9bn (Chart 1). The seasonally adjusted measure, in contrast, posted a modest decline.

　　The positive surprise reflected strong export performance: while we called for a y/y contraction, merchandise exports managed to expand 2.7% y/y in May. The advance was driven by shipments, as prices declined 6.7% y/y. Among components, performance was mixed. Agricultural manufactures and primary goods (up 22% and 1% y/y, respectively) led the advance. Exports of industrial manufactures and fuel, in contrast, contracted last month (by 12% and 45% y/y, respectively). In seasonally adjusted terms, exports expanded 3.6% m/m in May.

　　Imports, meanwhile, also stood slightly above expectations but still contracted 1.8% y/y pushed lower by prices (down 15% y/y). Among components, consumer and capital goods as well as vehicle imports all advanced. Capital goods imports were mainly lifted by purchases of industrial transport equipment. Total imports expanded 1.8% m/m (sa) last month.

　　We think the trade surplus will continue to improve throughout the year and stand close to a balanced result in 2016.

　　Separately, the current account stood at a deficit of USD4.0bn in Q1 2016. The result stood in line with our forecast and slightly ahead of the median estimate from the Bloomberg survey (USD3.9 and 3.7bn, respectively). On a 4-quarter moving sum basis, we estimate that the current account deficit stood little changed at 2.8% of GDP in Q1 (Chart 2). We expect the current account deficit to improve modestly to -2.5% of GDP this year.