A report released Tuesday showed that Argentina's trade with neighbour Brazil has reached its highest level since 2018, exports reaching US $ 4.2 billion until May, 33% better than in the first five months of last year, but 6% lower than the same period of 2019.
The document drafted by the consulting firm Ecolatina, based on data from the Brazilian Ministry of Development, Industry and Foreign Trade, the increase in trade flow grew by 147% YoY (year on year) in May, 9% more than in May 2019.
Trade with Brazil grew again in May and showed levels higher than those of pre-pandemic times, which, in fact, indicated that monthly imports and exports had their highest volume since August 2018.
This increase was driven by imports that jumped 186% YoY, which represents a 27% growth compared to that month, and exports that grew 103% YoY, still 11% below the same period of 2019. ”This improvement in bilateral trade of goods reflects the good performance of both economies at the beginning of this 2021: the expectations of Brazilian growth are constantly being revised upwards, despite their health situation, and many industries in our country (Argentina) showed levels of activity even above pre-pandemics, said the Ecolatina report.
Although the faster recovery of imports lifted May's trade imbalance to US $ 470 million - the largest deficit since June 2018 - it does not imply a significant restriction on the recovery of the level of activity since overall there has been a significant positive balance, largely due to the improvement in commodity prices.
Argentine exports to Brazil accumulate more than US $ 4.2 billion until May, an amount 33% higher than the first five months of last year, but 6% lower than the same period of 2019. Imports, meanwhile, accumulated close to US $ 4.8 billion, 55% more than the same period of 2020 and 12% higher than those of the first five months of 2019, thus accumulating a trade deficit of more than US $ 520 million so far in 2021.
The report also highlighted is the participation of Argentine products in the Brazilian market, which grew 0.5% compared to May of the previous year. After hitting historical lows in 2020 (Argentine purchases were 4.8% of total Brazilian imports in the January-May period), the share of our (Argentine) sales was 5.2% so far in 2021, Ecolatina pointed out, although it remained below the 6.5% average of the last ten years.
Exports to Brazil should increase by around 15% by the end of 2021, according to the report, driven by the recovery of its industrial production that would grow almost 5%, above the 4% average of the economy. This contribution will be essential so that our imports can grow ... without eroding the favourable trade balance obtained in 2020. In this way, the Treasury will be able to use reserves to cancel international obligations without generating great tensions on the level of net reserves,” the report also stated.