MercoPress. South Atlantic News Agency

Argentina/Brazil bilateral trade drops to 2010 level. Auto industry hardest hit

Vehicles, auto parts, tractors, engines were among the items which experienced the greatest contraction in bilateral sales

Bilateral trade between Mercosur leading partners Argentina and Brazil plummeted 27.6% in August and 22% in the last twelve months, according to Buenos Aires consultants, Abeceb. Recession in Brazil plus strict Argentine trade restrictions and slower domestic demand has contributed to the results.

 For Argentina “trade with Brazil has been falling at an accumulated 22% in the last year and this is because of a 24.5% drop in imports and 19.2% in exports”, said Abeceb which also pointed out that during August Argentine exports to Brazil were down 15.8% and imports 35.9%.

“This has been strongly influenced by Argentina's restriction on imports plus a slower domestic market and recession in Brazil, which means overall trade in eight months has reached 19,1bn dollars”.

The drop in Brazilian exports to Argentina, which totaled 9.8bn dollars, can be tracked to the auto industry, (70%), while the rest is attributed to a retraction in capital goods, minerals, fuel and chemicals.

Likewise Argentine exports to Brazil were also hit by lesser activity in the auto industry.

“Most of the drop in Argentine sales is because of lesser shipments of vehicles and auto-parts, although other issues as agriculture produce, minerals and fuels, also contributed” said Abeceb.

Argentine exports to Brazil in eight months reached 9.4bn dollars.

Last August Argentine sales to Brazil were 1.08bn dollars, with a fall in exports of autos, cargo vehicles, auto-parts, gasoline, farm produce, engines and pharmaceuticals among others.

Brazilian August exports to Argentina reached 1.16bn dollars, which are the lowest since the beginning of 2010, “which was when both countries were climbing out of recession triggered by the international collapse of markets”.

According to Abeceb the overall contraction in trade is associated to lesser sales of automobiles, auto-parts, cargo vehicles, minerals, engines, tractors, tires, pumps and compressors.

Argentina's bilateral trade deficit with Brazil is forecasted to reach 800 million dollars.