The Argentine exports to Brazil accumulate in eleven months of the year drop of more than 8% compared to the same period in 2022based especially on the impact of the drought. In this way, the trade balance with the main partner would close 2023 with a deficit higher than last year. Anyway, projections for 2024 look somewhat more encouraging. Analysts estimate for next year a recovery in exportsespecially from a improvement in agriculture and by the hand of a greatercompetitiveness” after the possible devaluation of the official dollar.
In November, imports from Brazil contracted 18.3% compared to the same month of 2022, which represented the second largest drop in the year and one of the deepest since the end of the pandemic. While Exports fell by 23.2% annuallyits second worst drop of the year since June’s 31%.
“In the eleven months of the year, the bilateral trade balance with Brazil has accumulated a deficit of US$4,840 million, 144.8% more than the accumulated in January-November 2022”, they pointed out from the consulting firm Abeceb. And they added: “To the negative impact of the drought, which is still felt in shipments from the agro-export sector and in purchases of agricultural raw materials necessary for agroindustry, there has also been added an increasing degree of control of imports through the SIRA channel”.
In summary, in the eleven months of 2023, Imports from Brazil increased 10.9% compared to the same period of the previous year, although showing accumulated declines of 12% annually in the last four months. “At the same time, exports have totaled US$11,103 million in January-November 2023, a drop of 8.4% compared to the same period last year; this makes 2023 the worst year for shipments to this partner since 2020“, highlighted from Abeceb.
What to expect in 2024
In this scenario, when analyzing what can be expected in terms of exports to Brazil for 2024, Matías Bolis Wilson, Chief Economist of the CAC, told Ámbito: “We hope that next year there will be some normalization of exports; that is, return to a level that is close to the average of recent years, especially in the field of the agro-export complex. Surely this will cushion part of the fiscal adjustment that the next government is going to carry out and the drop in activity will not be so precipitous.”
“As exchange rate policy and debt repayment also normalize, Argentina should enter a positive cycle, also helped by the lowering of international rates (especially by the Fed). The first quarter of 2024 looks like the most complicated,” the analyst explained.
For their part, Abeceb pointed out that 2024 “is shaping up to be a recessionary year for Argentina, since the unavoidable fiscal, monetary, and external adjustments to be made will have a high cost on activity and salaries for a good part of the year.”
“On the contrary, the Brazilian economy is expected to grow normally, although at a lower rate than in 2023: 1.5% annually is expected for next year, according to the BCB survey. In this way, shipments abroad by Argentina would recover, in step with the improvement in competitiveness after the official devaluation expected in December, and the beginning of the fine harvest and the reversal of the drought effect of the coarse harvest towards the second quarter”highlighted from the consulting firm.
Although, in any case, they clarified that, “in any case, Without stabilizing the important macroeconomic imbalances that affect the economy, the external sector will not be able to normalizegiving rise to a partial continuation of the already existing controls and stocks, at least until international reserves are accumulated.”
“In this way, in the first six months of the year we expect that imports will continue to slow down, with slowdowns in operations in the SIRA channel, although it is expected that they will be reduced throughout the year, reaching a very high MULC. slightly monitored at the end of the year,” they concluded from Abeceb.
Back to surplus
When analyzing how the balance of trade Argentina next year, the consulting firm Ecolatina estimated that “will return to its usual surplus”. “On the one hand, although below pre-drought levels, there will be a significant recovery in the value of the agricultural harvest, at around US$13 billion compared to 2023. To this will be added the energy sector. , which will strengthen the trade balance, providing, according to our estimates, a surplus close to US$3.5 billion, leaving behind a long history of deficits that began in 2011,” they detailed.
“Nevertheless, The interests that will be bidding next year to obtain the greatest net foreign exchange income that the trade balance will provide will be different.. Among the main ones, the need to rebuild a (negative) stock of international reserves at historical lows; debt payments in dollars with the private sector; delays in the remittance of profits and dividends; and the growing commercial debt with importers,” the firm stated.
Therefore, they concluded, there will be many challenges that will have to be addressed to “take advantage of the return to a positive trade balance, which will be far from sufficient to resolve the inherited problems.”
Source: Ambito
