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Argentina Trade March 2018

Argentina: Trade deficit narrows in March

Exports jumped from a revised 9.8% year-on-year increase in February (previously reported: +10.1% year-on-year) to a strong 17.2% expansion in March. The jump was driven by a double-digit increase in three of the four categories of the index. In annual terms, exports of primary products expanded 29.8%, while export of fuels and energy surged 58.1%.

Growth in imports slowed substantially from 26.3% in February to 8.8% in March. The increase was driven by a 31.6% expansion in fuel and lubricants and a 14.3% increase in intermediate goods mostly used for industrial production in the country.

As exports expanded at a sharper pace than imports, the trade deficit narrowed from USD 914 million in February to USD 611 million in March (March 2017: USD 910 million deficit). March’s print marked the first trade deficit reduction in 11 months. The 12-month moving average of the trade deficit came in at USD 9.78 billion, slightly below February’s USD 10.08 billion deficit (March 2017: USD 1.28 billion surplus).

The gaping trade deficit remains a major source of concern because it will contribute to a higher current account deficit, at a moment when the government is regularly tapping into international bond markets to keep up with elevated public spending. Whereas current borrowing levels are considered to be on a sustainable level, this could change quickly as the U.S. Federal Reserve continues to tighten monetary policy and inflation fails to slow. Such a scenario would force the government to keep borrowing from international sources to keep up with elevated public spending obligations.

Argentina Trade Balance Forecast

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