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November 27, 2014
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Trade balance plunges 92% in first quarter

Containers await to be shipped at the Buenos Aires City port
By Fermín Koop
Herald Staff
INDEC revises 2013 figures and reports surplus of US$8 billion last year, US$1 billion lower

The country’s trade balance plunged 92 percent in the first quarter of the year, compared to the same period last year, with the surplus coming in at US$121 million, according to INDEC statistics bureau. The decrease was far higher than expected by the markets.

This decline was reached after a US$41 million trade surplus was reported in March, a figure that represents a 95 percent drop compared to the same month in 2013.

Meanwhile, INDEC also corrected the trade figures reported for last year and said the trade balance dropped 35 percent instead of the 27 percent as was initially reported.

The correction in the 2013 trade figures means an additional US$1.02 billion decline in the trade balance, which ended with a US$8.004 billion surplus.

Even though a recovery of the country’s trade balance is largely expected by economists over the next few months thanks to the bulk of the grain harvest, the first quarter figures mark the beginning of what could be a bad year for trade, in part due to the expected decline in vehicle and biodiesel exports combined with growing energy imports. Some economists told the Herald they expect additional corrections of last year’s data over the next few months.

“There will be other data corrections by the INDEC. Because of that, we cannot know yet if the trade balance will be better or worse than last year,” Juan Paladino, an economist at Ecolatina agency, told the Herald. “There was a surplus this month only because the Central Bank limited the dollar purchases for imports. Nevertheless, since April there should be a better scenario thanks to the harvest season.”

Exports in the first quarter registered a nine-percent drop (US$15.87 billion), explained mainly by a 57 percent decline in grain exports. A similar scenario was seen by industrial manufactures, which dropped seven percent in the first three months of the year.

In March, exports dropped 16 percent (US$5.25 billion) mainly as a result of a 59 percent drop in grain exports. With the exception of energy and fuel, all export categories registered declines in March, including primary products (42 percent), agriculture manufactures (one percent) and industrial manufactures (11 percent).

“It wasn’t just grain exports that dropped but also all other areas that could have maintained a higher surplus, including the energy balance and vehicle exports,” Mauricio Claveri, coordinator of foreign trade at Abeceb, a local consultancy, told the Herald. “All the industrial export areas declined, while no corn exports were authorized in order to supply the local market.”

Meanwhile, imports dropped one percent in the first quarter of the year (US$15.75 billion). A five percent drop was registered on industrial imports as well as a 22 percent drop on vehicle imports, brought mainly from Brazil and México.

In March, imports dropped four percent (US$5.21 billion) mainly due to a 39 percent drop of vehicle imports and a 17 percent decline in consumer goods.

“There were no surprises on imports. The figures we see now will be repeated throughout the year, with an average one or two percent drop,” Claveri said.

Mercosur, the main market

The Mercosur bloc continues to be the country’s main market, accounting for 35 percent of the exports sent to countries that are part of the bloc and 26 percent of Argentina’s imports.

Imports from Mercosur dropped due to fewer purchases in all areas, except on fuel and lubricants which increased, while exports dropped due to fewer sales of primary products, including grains, fuels, energy and industrial manufactures.

A trade deficit was seen in March in trade with all the other blocs, including ASEAN (Korea, China, Japan and India) with US$576 million, the European Union with US$388 million and NAFTA (US$149 million).

Exports to the ASEAN bloc, the second most important one for Argentina, dropped 18 percent in March due to fewer sales of fuel and energy, primary products and manufactured goods. At the same time, imports from the bloc dropped five percent due to fewer purchases of capital goods and intermediate goods.

The main destinations of the country’s exports were Brazil, the United States, India and Germany, while most of the country’s purchases came from Brazil, China, United States, Germany and México.

@ferminkoop

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