MercoPress. South Atlantic News Agency

Argentina's trade balance with Brazil in the red for 6th month in a row

In 2018 Argentina totaled 11 consecutive months of negative trade balances with Brazil

Bilateral trade between Mercosur partners Brazil and Argentina was reported to have reached US$ 2,937 million in the month of June of 2022, a 46.9% increase against the same period of 2021, according to the Argentine Chamber of Commerce (CAC) document released earlier this week.

The CAC report also showed a 9.2% surge over the last month after an 8.5% rise in imports and a 9.9% in Argentine exports.

Argentine sales to Brazil increased in June 2022 by 38.2% for June 2021, totaling US$ 1,345 million and continuing with the positive trend of the previous months, while imports amounted to US$1,593 million and showed a 55.1% interannual increase.

Thus, the trade balance for Argentina showed a deficit for the sixth consecutive month reaching US$ 248 million. The last time Argentine produced half a year of negative successive monthly trade balances was recorded in 2018 when it reached eleven consecutive months under then-President Mauricio Macri.

Trade between both countries accumulated in the first six months of 2022 a negative balance for Argentina for US$ 1,344 million since exports grew 17.6% in 2022 compared to the first six months of 2021, while imports from Brazil increased by 33.3% in the same period.

The year-on-year increase in Argentina's exports to Brazil recorded in June (38.2%) stemmed chiefly from passenger vehicles, wheat and unmilled rye, motor vehicles for the transportation of goods and special uses, motor vehicle parts and accessories, and piston engines and their parts, while the year-on-year increase in Argentine imports (55.1%) was mainly explained by petroleum fuel oils and bituminous minerals, passenger motor vehicles, iron ores and their concentrates, and motor vehicle parts and accessories.

Last week, the Argentine Chamber of Commerce requested a meeting with newly-appointed Economy Minister Silvina Batakis after foreseeing “negative expectations.”

CAC Chairman Natalio Mario Grinman insisted that “fights in the Government” generate damage in the sector, which causes “negative expectations” and “uncertainty.”

“The economy works with expectations, for it to work there must be good expectations,” Grinman said in a radio interview. “Here in Argentina we have been having negative expectations for a long time, uncertainty, lack of confidence, important fights in the government, everything hurts the country,” he added. “Uncertainty is worse than bad.
Uncertainty generates these problems. When suppliers send a note saying that they are suspending the delivery of merchandise, a complex movement is produced”, he explained. In addition to the “lack of dollars in the country” conditions for a “perfect storm” are met. “When imports are closed,...” and hard currency is not available, hoping foreign suppliers would finance Argentina's spending for 6 months “is utopia,” Grinman stressed.