Argentina’s trade balance with Brazil turns positive for the second consecutive month
Argentina’s trade balance with Brazil gave positive results for the second consecutive month in October 2021. However, the figures for the first 10 months of the year are still in the red.
After eight months of deficit, the positive results in two months were still insufficient for Argentina to fill the trade deficit with the neighbor and partner of Mercosur, which currently stands at 510 million dollars, according to data from the Special Secretariat of the United Nations. Brazil for foreign trade and international affairs. (SECINT).
Nevertheless, Argentina’s exports hit a record in seven years, after the surplus of US $ 92 million in October. Exports to Brazil grew 50.7% annually to a total of around US $ 1.218 million, the highest amount since September 2014, driven by sales of vehicles, wheat and corn.
In contrast, imports rose 37.6% per year, boosted by purchases of iron and steel.
Thus, the volume of trade between the two countries reached 2,344 million US dollars, the highest in more than three years.
A report by consulting firm Abeceb explains that Argentina’s restrictions on car imports and Brazil’s difficulties in exporting due to the lack of supply of semiconductor chips, led to these results, in addition to the hydroelectric production crisis in Brazil due to the drought, which favored Argentinian exports.
Trade accumulated so far in 2021 was 11.4% higher than in the same period of 2019, showing a recovery from pre-pandemic times.
For Argentina, the first 10 months of 2021 showed a 45.4% yoy increase in exports and a 46.3% yoy increase in imports. Hence the deficit.
“Historically, we have seen that trade recoveries are accompanied by a greater red in Argentina’s foreign exchange balance, given that the trade balance with Brazil has been in deficit since 2004 (except in 2019) due to large industrial asymmetries, ”explained Abeceb’s report.
“This fact is relevant given that we expect the national economy to grow faster than the Brazilian in 2021 (+ 7.9% vs. + 4.9% per year) and in 2022 (+ 2% vs. + 1.2%) ?? it continued.
The consulting firm also predicts that in the short term, trade will continue to increase in line with the end of the pandemic, but some uncertainty remains for 2022.
Brazil is experiencing successive cuts in economic expansion projections and erosion of consumer and industrial confidence, in addition to a more restrictive monetary policy in a context of rising inflation and uncertainty linked to the presidential elections .
Abeceb also highlighted Argentina’s foreign exchange restrictions, which could affect trade as a devaluation of the peso is eagerly anticipated.
Also, normalizing the challenges faced by global supply chains will take time, so it is expected that some shortage of key inputs (such as chips) will continue, preventing the business from running smoothly. manufacturing, and with it, Finally, although the outlook has improved in September and October, the historic Paraná River spillway will continue to be a factor to watch as the prospect of drought for the coming months suggests it could continue to hamper normal trade flows between the two countries. “, adds the report.