In the midst of the battle over whether Brazil will finance Argentina’s imports from that country, data was released that the bilateral deficit jumped 220.7% in April. Therefore, the trade balance for that month ended in a red for Argentina by $776 million, the highest figure in five years.
On Tuesday, President Alberto Fernández and Minister Sergio Massa traveled to Brazil with the promise of signing an agreement that would allow companies that buy from the neighboring country to pay with the credit granted by that country. That way they could stop using Central Bank dollars and thus jump the currency turnstile.
For now the deal is blocked. So far there are only displays of goodwill but no concrete progress.
In April, Argentine imports from Brazil increased by 31%, thanks to purchases of soybeans. While the drought is hitting local fields hard, the situation on the other side of the border is more favourable. Thus, last month, oilseed imports increased by 934.7%.
Given the decline in the Argentine harvest and the need for production hubs (such as milling, which operates at 50% idle capacity), soybean imports from Brazil it went from $28 million in April 2022 to $290 million last month.
A report from consulting firm Abeceb details this “It is already the fifth consecutive month that the trade result with Brazil worsens, leaving behind the anecdotal surplus of US$54 million observed in November 2022″.
“It has been reached the largest monthly bilateral trade deficit in five yearsin a context in which the Central Bank is in a delicate situation in terms of reserves and a bilateral agreement is being negotiated in which Argentina can finance imports without using dollars”, they specified.
Imports grew 31% year-on-year -higher than the 24.3% achieved in the first quarter- and achieved $1.665 million in April, being the highest nominal amount imported since April 2018.
As regards the automotive sector, imports of “Parts and accessories for motor vehicles” and “passenger cars” recorded an increase of 33.1% and 23.4% respectively. Between the two products, accounted for 20% of total imports from the neighboring country.
In turn, the import of “Pipes, hollow sections and pipe fittings, of iron or steel” showed “a notable increase of more than 2,000%, reaching a figure of $51.7 million in April 2023, while only $2.2 million was imported the previous year.
As imports strengthen, exports plummet. Sale of Argentinian products in Brazil it reached $889 million, a year-over-year decline of -13.6%.
A report from the Argentine Chamber of Commerce points out that the decline in exports “corresponded mainly to decreases in passenger cars and unmilled wheat and rye”.
The April data mark a sharp deceleration in export growth in the first quarter of 2023, which they advanced 15.2%, led by the automotive sector. “Now, as we enter the heavy harvest phase, we are starting to see the impact of the drought on the export figures,” Abeceb says.
Reached the bilateral trade deficit accumulated in the first four months of the year $1,774 million (79% of the red that occurred in the 12 months of 2022). So you have to go back to the first quarter of 2018 to find a major trade red, which was $2,041 million at that time.
“The prospects for the future are not favourableespecially for the coming months in a context in which the impacts of drought on crops and agro-industrial exports are being explored”.
AQ
Source: Clarin
