MercoPress. South Atlantic News Agency

Argentina's industrial production and trade surplus falls point to recession

The worst performing sector was the auto industry and auto exports

Argentina's industrial production contracted 6% in March from the same month last year, the government said on Friday, marking the sixth consecutive monthly loss in factory output due in part to weakness in the auto-making sector. In another report released on Friday Argentina's trade surplus contracted dramatically, indicating the country could be effectively heading for a recession.

 Factory output shrank 1.8% in March as measured against February, according to a statement from the INDEC national statistics institute. The year-on-year figure was seasonally adjusted while the March versus February figure non-seasonally adjusted.

In the last twelve months car production plummeted 25.1%, and during the first quarter of the year was down 14.5%, mainly because of the fall in exports to Brazil.

This confirms six months running with negative results for manufacturing: 0.6% in February; 3% in January; 5.6% in December; 4.9% in November and 1.1% in October. In the first quarter of this year the negative performance was 3.1% compared to the same period a year ago.

Other negative areas include, oil, minus 20%; tobacco down 10.4% while textiles was up 6.5% as well as printing, 11.6% and metal-mechanics, 3.4%.

Indec also revealed that Argentina's trade surplus in March plunged 95% on the year to 41 million dollars, owing to a broad decline in exports of commodities and manufactured goods.

Exports fell 16% on the year to 5.25 billion in March, led by a plunge in grain and soybean exports. Shipments of industrial products like cars also fell as sluggish growth in neighboring Brazil trimmed demand for Argentine manufactured goods. Imports decreased 4% to 5.21 billion, led by declines in consumer goods and spare parts, according to preliminary data.

The trade surplus for the first quarter shrank to 121 million, from 1.5 billion a year ago due to a drop in farm shipments and rising fuel imports. Argentina's energy deficit widened 19% on the year to 792 million in the quarter.

However the trade surplus is set to get a boost between April and July as farmers harvest and ship what is expected to be a record soybean crop. Argentina is the world's No. 3 soybean exporter, and the leader in soy-oil and soy-meal exports.

The Argentine economy is widely expected to tip into a recession this year as inflation of more than 30% erodes the public's purchasing power and spurs locals and foreigners alike to pull their money out of the country.