In March, the trade deficit with Brazil was $393 million. It was as a result of the drought that only increased exports by 21%, while imports increased by 31% due to increased purchases of cars and auto parts.
A report by the consulting firm Abeceb specifies that the red in March jumped by 73.8% compared to the same month in 2022, when the bilateral deficit was $226 million. This way, It is already the fourth consecutive month in which the trade result with Brazil worsens.
“This exhibited result the largest monthly bilateral trade deficit in five years and in a context where the Central Bank is in a delicate situation in terms of reserves, the situation lights up with yellow lights”, says Abeceb.
Imports grew 31.6% year-on-year and caught up US$1,578 million in March.
Purchases of “passenger cars” and “automotive parts and accessories” – the two products with the largest share – grew by 73.7% and 32.8% respectively.
Between both goods they accounted for 21.5% of imports from Brazil in March.
What happened to exports to Brazil?
Exports grew 21.7% year on year in March and caught up $1,184 million.
“Among the products with the highest participation in total exports we have heterogeneous dynamics, with an agricultural sector affected by drought, and an automotive sector that is more than offsetting the decline in agricultural exports,” Abeceb says.
The export of “Cars” and “Vehicles for the transport of goods and special uses” increased by 43.8% and 22.2%, respectively. Both products were those with the highest participation in total exports in March (between the two they accounted for 36.1%), the same as this year and 2022.
Due to the drought, “unmilled wheat and rye” – one of the products with the highest export participation – recorded a decline of 24.5%. “The impact of the drought can be clearly observed: while this product accounted for 14% of exports in March-22 reaching 136 million dollarslast month it explained only 8.7%, with a value of $103 million.”
From the Argentine Chamber of Commerce (CAC) they indicated that trade between the two countries accumulates in the first quarter of the year a negative balance for Argentina of US$ 999 million. It is worth noting that exports grew by 15.2% in the first three months of 2023 compared to three months of 2022, while imports from Brazil increased by 24.3% in the same period.
“Going forward, the central bank is expected to continue to face an extremely tight foreign exchange market, with export losses potentially as high as $20 billion due to drought, and a government that will resist at all costs a strong devaluation. Thus, the only adjustment variable to decompress the pressure on exchange rates is the import adjustment -something he has already done in the last few months-“, says Abeceb.
In this context, the consultancy expects that imports from Brazil “will continue to move at a slower pace than last year -as they did in the first quarter-, while exports would remain relatively stable -given the low weight of agriculture and the strong traction demonstrated by the auto-industry”.
Furthermore, they state that “it will be necessary to follow up closely the progress of the negotiations with the Development Bank of Brazil for the financing of imports through Banco Nación; something that, if implemented, could bring some relief to the demand for dollars.”
Argentina ranked fourth among Brazil’s largest suppliers, behind China and Hong Kong and Macao (USD 4,236 million), the United States (USD 3,715 million) and Germany (USD 1,340 million). In turn, among Brazil’s main buyers, Argentina ranked third, behind China, Hong Kong and Macao ($10,978 million) and the United States ($3,128 million).
The CAC points out that “market expectations surveyed in March by the Central Bank of Brazil showed a slight increase compared to the previous month in terms of estimated growth for 2023 (0.90% against 0.85%)”.
AQ
Source: Clarin
