MercoPress. South Atlantic News Agency

Brazilian auto exports expected to plunge because of Argentina's recession

At an event in Sao Paulo, Brazilian auto-making group Anfavea said auto exports to Argentina would likely fall by 28.5% to 450,000 units in 2019

Brazilian vehicle exports to Argentina are expected to plunge this year, and the industry could face threats from rising imports following a free trade agreement between the European Union and Mercosur, a major industry body said.

At an event in Sao Paulo, Brazilian auto-making group Anfavea said auto exports to Mercosur trade partner Argentina would likely fall by 28.5% to 450,000 units in 2019, sharply down from the previous forecast of a 6.2% fall.

Brazil's central bank has cited economic uncertainty in Argentina, Brazil's third largest export market, as one of the main reasons why exports will struggle this year and why net trade will be a drag on overall economic growth.

While 2019 forecasts for domestic auto consumption and total production were left unchanged, Anfavea president Luiz Carlos Moraes said Brazil's auto-making sector will need to specialize on what it does best and quickly reduce inefficiencies due to greater competition from the Mercosur-EU accord.

Carmakers “don't have to specialize in everything. We'll concentrate on what we do best,” Moraes said.

On Friday a week ago, the EU and Mercosur concluded two decades of talks to reach agreement on a landmark trade deal. While much of Brazil's economy is still highly protected, the current administration of President Jair Bolsonaro has made economic liberalization a cornerstone of its agenda.