MercoPress. South Atlantic News Agency

Helped by import restrictions, Argentina’s March trade surplus soars 141%

Production Minister Giorgi expects a new exports record for 2011

Argentina's March trade surplus more than doubled (up 141%) from the same month last year to 667 million US dollars according to official data, helped by the government’s import curbs and stronger grains exports. Trade surplus in March 2010 was 276 million USD.

A surge in purchases abroad have prompted the government to expand its non automatic import licenses, (which now cover 600 items) as it seeks to protect the trade surplus, a pillar of President Cristina Fernandez's economic policy.

Argentina’s economy is booming on consumer spending, agricultural exports and manufacturing, with strong demand for automobiles from neighbouring Brazil. But the trade surplus narrowed last year as imports grew at double the rate of exports, due to strong domestic demand and the Peso's appreciation against the US dollar in real terms.

The surplus had narrowed further in January and was virtually unchanged in February year-on-year. The March figure broke that trend, with the surplus more than doubling from March 2010, when imports surged and a strike at a key grains port hampered exports.

“This is in part due to the government limits on imports but also because exports were high in March,” said Marina Dal Poggetto, an economist at Estudio Bein & Asociados consulting group. An improved soy harvest this season in the world's third soybean exporter also boosted the trade surplus, Dal Poggetto said.

Exports in March rose 35% to 6.3 billion US dollars driven by increasing sales of grains and oilseeds, as well as vehicles and auto parts. Imports climbed 28% to 5.63 billion USD due to a greater demand for fuel products, intermediate and capital goods and accessories.

However in the first quarter of the year the overall trade surplus reached 1.79 billion US dollars which is 10% below the same period of a year ago.

“The (positive) evolution of the trade balance can’t be explained without the effect of the imports’ restrictions, both written and orally. Without restrictions imports should be growing at a rate of 40/45%, given the strong economic activity and appreciated Peso”, said Professor Diego Giacomini, economist at the University of Buenos Aires.

Giacomini also cautioned about the fact that capital goods imports (new machinery, equipment) was up only 13% compared to the 28% average, which will have an impact on future domestic production and supply.

With international lawsuits pending from the massive default of 2002, the Argentine government has strived to protect local industry and the trade surplus, which allows the administration to accumulate foreign currency reserves to pay off debt.

The Argentine government emphasized the positive side saying that exports are poised to reach a new record this year after having totalled 68.5 billion in 2010. “Exports in the first quarter already are 7% above the previous record of 2008”, said Production minister Debora Giorgi who pointed out that the main export item has been manufactured goods.