The hit of the drought wiped out exports in February. That month they only reached $5.230 milliondown by 18.9% compared to the same period of the previous year.
The dollars that the drought stopped contributing made the exchange rate tighter and the drop in imports deeper. Total purchases abroad 5,048 million dollarswhich represented a year-over-year decline of 10.4%.
This two-fold decline resulted in last month ending with a trade surplus of 182 million dollarswhich represents a decrease of 77.7% compared to the positive balance of the same month of 2022.
The report released by INDEC this afternoon shows that the drop in exports is mainly due to the lower sales of wheat, flour and other soy derivatives and biodiesel. With these results February is the second consecutive month in which the impact of drought on foreign trade is seen.
Within the articles that make up exports, the most marked drop was that of the first products with 33.6%. In this block, cereals recorded a contraction of 49.7% per year, which explains almost all of the lower exports of primary products.
All export items were negative. Manufactured goods of agricultural origin decreased by 16.4%, while manufactured goods of industrial origin decreased by 14.4% and fuel and energy recorded a slight contraction of 0.1%.
On the import side, the most marked drop was for fuels and energy with 29.6% and for capital goods with 21.1%, essential for developing production.
Among external purchases, the only two categories that managed to grow were Passenger cars (with an increase of 8.3% on an annual basis) and Spare parts and accessories for capital goods (with an increase of 2.8%), also if for the pure and exclusive effect of the increase in prices, since imported volumes decreased by 5.9% and 0.9% respectively.
In the first two months of the year, Argentina ran a trade deficit of $261 millioncompared to a positive balance of US$1,115 million in the same period of 2022.
This outcome complicates the fiscal goal of running a trade surplus of 12,347 million dollars. Last year the result was US$ 6,923 million.
From Abeceb indicate exports showed the largest annual percentage decline in the last 7 years (excluding 2020 in the midst of the pandemic, we need to go back to December 2015 to find a greater drop than that of February this year).
And they offer it “Going forward, the prospects are not at all favourableas the climate does not improve and projections for agriculture and gross crops worsen.”
The consultant’s estimate is that the value of agro-industrial exports it would drop between 12 and 15 billion dollars compared to 2022.
Abeceb points out that in 2023 imports would also decrease. “The main reason that would explain this decline is the delicate situation in terms of central bank reserves.”
“Given the government’s reluctance to adjust the official exchange rate, attempts will be made to partially offset the decline in the supply of agricultural dollars through a tightening of import restrictions, which had already been glimpsed towards the end of last year-” says Abeceb.
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.