MercoPress. South Atlantic News Agency

Argentina’s trade surplus shrinking under a strong influx of imports

Energy imports have also soared particularly liquid gas

Argentina's trade surplus fell 22% on the year in June. Trade surplus last month 1.02 billion dollars, down from a revised 1.31 billion in June 2010, according to the national statistics agency, Indec.

During the first half of the year, the surplus fell 21% to 5.79 billion. The surplus for the 12-month period ended June 30 was 10.1 billion. The central bank's latest forecast is for the surplus to shrink to 9 billion this year, from 12.06 billion in 2010.

Argentina's booming economy is driving demand for a wide range of imported capital goods, spare parts, and consumer products. At the same time, energy imports have soared as government price caps and export taxes discourage investment in oil and natural gas exploration even though Argentina is thought to hold vast reserves of unconventional natural gas.

President Cristina Kirchner has stepped up measures aimed at reducing or substituting imports in order to protect the shrinking trade surplus, which is a key source of international reserves.

Importers are under pressure to either make products locally or offset their imports by exporting goods for a similar value.

Grupo Pulenta, the local Porsche importer, has inked an agreement with the government to export wine and olive oil in exchange for authorization to import luxury cars. Alfa Romeo importer Centro Milano will build a bio-diesel plant that will export about 11 million dollars a year in fuel.

Indec said exports increased 24% on the year to 7.92 billion in June, thanks largely to higher prices. Export growth was led by fats and oils, automobiles, grains, precious metals and chemicals.

Imports rose 37% to 6.90 billion, due to higher volumes, especially for fuel oil and liquid natural gas.

Mercosur was the destination of 24% of Argentina's exports and the source of 28% of imports. Argentina ran a trade deficit of 247 million with its largest trading partner, Brazil, in June, and a deficit of 1.79 billion during the first half of the year.