Argentina: Exports and imports free fall continues in May
June 19, 2014
In May, exports plunged a sharp 16.3% over the same month last year. The decline followed the 13.2% drop recorded in April and contrasted the 18.4% increase recorded in the same month last year. The reading, which marked the largest contraction in five months, was underpinned by a 55.0% drop in grain exports and a 61.0% decline in fuel and energy.
A month-on-month comparison does not corroborate the gloomy picture suggested by the annual figures. Exports expanded 0.5% on a seasonally-adjusted basis in May, which was, nevertheless, below the 6.3% increase recorded in the previous month.
Imports dropped 17.1% annually in May (May 2013: +18.0% year-on-year), which followed the 14.2% contraction observed in April and marked the sharpest decrease since August 2012. As a result, the trade surplus reached USD 1.3 billion, which was slightly down from the USD 1.4 million recorded in May 2013 and represented the largest surplus in a year. Moreover, this was higher than the USD 926 million surplus recorded in April, but undershot the USD 1.5 billion surplus that market analysts had expected. In the last 12 months, the trade balance posted a USD 6.4 billion surplus (April: USD 6.6 billion), which represented the lowest reading since December 2001.
According to analysts, the slowdown in trade mostly reflects a lower activity level, a delay in the harvest due to bad weather and tough government import restrictions. The country, which has had no access to international capital markets since defaulting in 2001, depends heavily on commodity exports to draw the foreign exchange reserves required to fulfill its debt obligations.