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Trade balance drops 28.4% in first semester

Containers await to be shipped at the Buenos Aires City port
By Fermín Koop
Herald Staff
Exports of primary products plunged 31 percent, imports of vehicles 35 percent

Argentina’s trade balance plunged 28.4 percent in the first half of the year, compared to the same period the year before, with the surplus coming in at US$3.684 billion million, according to the state-run INDEC statistics bureau.

This decline was reached after a US$1.379 billion trade surplus was reported in June, a figure that represents a 13 percent growth compared to the same month in 2013. It was the first month of the year with a positive variation. Analysts surveyed by Reuters said on Tuesday they expected a 1.6 percent drop on an inter-annual basis to about US$ 1.2 billion.

Exports in the first half of the year registered a ten percent drop (US$36.778 billion), explained mainly by a 31 percent decline in primary products and a 12 percent drop on fuel and energy. Meanwhile, imports showed an eight percent drop (33.094), explained mainly by a 35 percent drop on vehicles.

“There have been fewer exports of corn and wheat, which explain the drop on primary products in the first semester. At the same time, Argentina exported less oil in order to process it here and reduce the need to import it,” Nicolás Zeolla, economist at the Centre of Economic and Social Studies of Scalabrini Ortiz (CESO), told the Herald. “The lower imports can be explained due to a lower economic activity.”

In June, exports dropped three percent (US$7.387 billion) and all areas, except agriculture manufactures that rose 14 percent, registered negative figures. The highest drop was seen on primary products, which decreased 14 percent, followed by a 12 percent drop on industrial manufactures and one percent on fuel and energy.

Cereal exports registered a 52 percent drop, followed by a 28 percent decrease on materials for land transportation, a 47 percent on minerals and a 37 percent on prepared vegetables, among others. On the other hand, some products helped compensate the drop such as seeds, oleaginous fruits and waste from the food industry.

“The only crop that registered positive figures on exports was soy. The rest of them such as wheat, corn, barley and sorghum registered drops. June’s export drop was lower than the figures of the first semester because in the same month last year exports hadn’t grown that much. It’s a trend that continues,” Juan Pablo Paladino, economist at Ecolatina agency, told the Herald.

June’s imports registered a six percent drop (US$6.008 million) and all areas, with the exception of capital goods that rose 24 percent, showed negative figures. Vehicle imports dropped 45 percent in June and explain mainly the general drop on imports. Decreases were seen also on parts and accessories of capital goods (21 percent), fuel (two percent) and intermediate goods (one percent).

“Vehicles were for a long time the engine of the economy but domestic sales have dropped in the past months. It’s by far the area of imports that has dropped the most,” Paladino said. “This adds up to a trade policy applied by the government that restricted imports. When the economy drops one percentage point, imports fall three times more. Argentina uses 80 percent of its imports to produce goods and the remaining 20 for consumption.”

Half of the drop in exports registered in June were due to lower sales to Mercosur (15 percent), Brazil (16 percent) and Chile (21 percent). On the other hand, more than half of the drop on imports is due purchases from countries of the region.

Mercosur, the main market

The Mercosur bloc continues to be the country’s main market, accounting for 22 percent of the exports sent to countries that are part of the bloc and 21 percent of Argentina’s imports. A trade surplus of US$1.95 billion was seen on the first six months, while a US$364 million surplus was registered in June.

Imports from Mercosur dropped 18 percent in the first semester of the year and 23 percent in June due to fewer purchases in all areas, except on consumption goods. Meanwhile, exports dropped 12 percent in the first half of the year and 15 percent in June due to fewer sales of primary products, including grains, fuels, energy and industrial manufactures.

A trade deficit was seen in the first semester in trade with all the other blocs, including ASEAN (Korea, China, Japan and India) with US$724 million, the European Union with US$884 million and NAFTA (US$2.004 billion).

Exports to the ASEAN bloc, the second most important one for Argentina, rose 18 percent in June but dropped five percent in the first semester due to lower sales of primary products, industrial manufactures and fuel and energy. At the same time, imports from the bloc dropped on percent in the first six months of the year due to fewer purchases of capital goods and consumption goods.

The main destinations of the country’s exports in the first semester were Brazil, China, the United States, Chile and India, while most of the country’s purchases came from Brazil, China, United States, Germany and Trinidad and Tobago.

@ferminkoop
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