Exports in Argentina

Argentina - Exports

Trade deficit narrows marginally in February

In February, exports expanded 10.1% year-on-year, a slight deceleration from January’s revised 11.1% increase (previously reported: +10.7% year-on-year). Increases were recorded in exports of three of the four main categories of the index. In annual terms, exports of primary products expanded 13.8%, while export of fuels and energy surged 83.6%. In contrast, manufactured goods of agricultural origin was the only component that contracted in February (-0.4% yoy).

Growth in imports moderated from a 32.1% increase in January to a still-strong 26.3% expansion in February. The increase was driven by double-digit expansions in all but one component of the index. In annual terms, intermediate goods rose 35.4%, fuel and lubricants 30.8%, and consumer goods 23.3%. The slowdown most notably reflected a deceleration in imports of capital goods, from 29.5% to 7.3%.

The trade deficit narrowed marginally, from USD 969 million in the previous month to USD 903 million in February (February 2017: USD 217.0 million deficit). The reading marked the fourteenth consecutive month that the trade balance was in the red. The widening trade deficit is becoming a major source of concern because it will contribute to a higher current account deficit, at a moment when the government is borrowing heavily from foreign sources 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, which will force the government to keep borrowing from international sources.

Panelists participating in the LatinFocus Consensus Forecast expect exports to grow 5.9% in 2018 and imports to increase 8.9%, pushing the trade balance to a USD 1.8 billion deficit. For 2019, the panel expects exports to increase 6.6% and imports to expand 7.7%, with a trade shortfall of USD 2.8 billion.