Argentina records highest monthly trade deficit with Brazil in seven years

Argentina’s trade deficit with Brazil last month was US$326 million, the highest since 2018 when it topped US$400 million, thus returning to negative territory after a December surplus.

A new report by the Cámara Argentina de Comercio y Servicios (Argentine Chamber of Commerce, CAC) found that bilateral trade between the two countries was US$2.098 billion last month. That’s up 34.1 percent from the previous January, when it had been US$1.564 billion, but 13.3 percent down from December. The change was down to Argentine exports to Brazil shrinking 28.4 percent – imports meanwhile rose 2.5 percent.

Argentine sales to Brazil rose 11.2 percent as against the previous January (a positive trend for the eighth consecutive month) to reach US$886 million while importing US$1.212 billion, showing an interannual rise of 57.9 percent.

The interannual increase of exports to Brazil mainly corresponds to liquid propane and butane, ethylene copolymers, piston motors and parts, cheese and milk, alcohol, phenols and derivatives while the interannual increase in Argentine imports (57.9 percent) is mainly explained by automobiles, aluminium and cacao powder.

Experts at the ABECEB consultancy firm indicated that “without doubt, this surge in imports has to do with a low basis of comparison (in January, 2024 import levels were very low, reflecting the impact of the previous month’s devaluation) to which should be added the incentive stemming from the removal of the PAIS tax last December 23, making imports cheaper.”

The firm added that  “the heavy traction coming from auto imports in the first month of the year (versus the previous January when purchases were virtually paralysed) should be highlighted.”

“This year highway vehicles grew 3,927 percent annually while the import of vehicles for the transport of merchandise rose 184 percent to US$61.5 million with passenger cars increasing 127.7 percent,” it added.

"Auto parts registered a lower percentage increase but significant bulk (9.3 percent of total imports), rising 25.5 percent annually to US$112.5 million. On average, these increases explain 57 percent of the rise in imports (US$256 million of a total US$445 million),” added the ABECEB analysis.

The firm’s experrts year they expect “Argentina’s bilateral trade deficit with Brazil to amplify significantly to probably graze the level of US$4 billion with imports likely to grow less than 30 percent (with around US$18 billion as the floor) while exports also go up but less (between 11 and 13 percent annually).”

– TIMES/NA