MercoPress. South Atlantic News Agency

Argentine exports to Brazil grow, but still in the red despite September's surplus

Argentina is bouncing back after two years of strong setbacks.

Argentina has recorded a trade surplus with Brazil in September following a YoY increase in sales of 37% year-on-year, it was reported.

According to the latest data, bilateral trade went up 46% so far this year, compared to the same period in 2020, with Argentine exports worth over US $ 8 billion.

The new figures mean Argentina is bouncing back after two years of strong setbacks. Key to this recovery were corn, wheat and the automotive and steel industries, according to a study from the consulting firm Abeceb.

Commercial flow (exports + imports) amounted to US $ 1,976 million in September (+ 28.8% year-on-year), growing for the ninth consecutive month, the study showed.

Although below August's US $ 2,122 million, trade remained at a high level, being the best September since 2017. It also showed a full recovery from 2020's lockdown, with an accumulative rise of 46.1% YoY in 2021 and 8.6% compared to the same period in 2019.

The trade balance was practically neutral in September (+ US $ 1 million), but a significant improvement from the US $ 91 million deficit registered in September 2020. Still, between January and September, the accumulated commercial red numbers rose to US $ 602 million, the worst data for the same period since 2018.

Exports to Brazil totalled US $ 988 million, showing an increase of 37% YoY, September is the ninth consecutive month of growth, while Argentine purchases jumped 21.5% YoY to US $ 988 million, the seventh consecutive month on the rise.

In the first nine months of 2021, exports to Brazil grew 44.7%, totalling US $ 8.141 million, while Argentine imports showed an even bigger growth of 47.5%, reaching US $ 8.743 million.

According to Abeceb, for the remainder of the year trade with Brazil would remain at “high levels, with exports and imports above pre-pandemic levels,” although ”some sources of uncertainty are emerging.”

Trade will be favoured by a better performance of both economies until the end of the year due to advances in vaccination, fewer restrictions and a decrease in cases, the document forecasts.

Argentine automotive exports would continue to grow, as well as manufactures of industrial origin (MOI) in general, in line with the recovery of industrial production in Brazil; while a more stressed foreign exchange market in the coming months would affect imports.

As a devaluation of the Argentine peso seems inevitable in the short run, an advance in purchases and postponement of sales is to be expected, which would deepen the exchange deficit bias.

On the other hand, the persistence of difficulties in global supply chains continue to generate shortages of certain key inputs, affecting the productive dynamics of some industries, and with it, trade between countries.

Abeceb also warned that “the effects of the historical downspout of the Paraná River which can hinder the normal flow of trade between the two countries should not be disregarded.”