Argentina: Trade balance records largest surplus in over a year in June
July 23, 2014
In June, exports declined 2.6% over the same month last year (June 2013: +11.4% year-on-year), which followed the sharp 16.3% drop recorded in May. The print, which marked the smallest contraction in seven months, mostly reflected a softer decline in shipments of fuel and energy as well as a healthy expansion in soybean exports as the harvest season reaches its peak.
A month-on-month comparison corroborates the slight improvement suggested by the annual figures. Exports expanded 8.0% on a seasonally-adjusted basis in June, which was well above the 2.0% increase recorded in the previous month.
Imports dropped 5.7% annually in June (June 2013: +5.5% yoy), which followed the 17.1% contraction observed in May. As a result, the trade surplus reached USD 1.4 billion, which was slightly up from the USD 1.2 million recorded in June 2013 and represented the largest surplus since May 2013. Moreover, this was higher than the USD 1.3 million surplus recorded in May of this year and exceeded the USD 1.2 billion surplus that market analysts had expected. In the 12 months up to June, the trade balance posted an accumulated USD 6.5 billion surplus (May: USD 6.4 billion).
According to analysts, Argentinean trade has been heavily damaged by tough government import restrictions, weaker demand from Brazil—the country’s top trading partner—and high inflation, which is dampening the country’s competitiveness. In addition, farmers continue to hoard grains and soybeans to hedge against the weak peso. 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.