The terms of tradewhich evaluate the competitiveness of foreign trade prices, reached their lowest level since the pandemic in the first half of the yearThis happened because the price of exports contracted more than that of imports.
According to a report published by INDEC on Tuesday, the price of products that Argentina sells abroad fell 7.4% year-on-year in the second quarter of 2024, while between January and June they accumulated a contraction of 7.7% compared to the same period in 2023. Thus, they fell back to their lowest levels since 2020.
The decline in the second quarter was mainly explained by the decrease in primary products (PP) and manufactures of agricultural origin (MOA)10.6% and 14%, respectively. Particularly notable were the declines in prices of the main crops: Soybeans, corn and wheat all experienced declines of more than 20%.
Significant declines were also recorded in meat, dairy products and some industrial products such as chemicals and plastics.
Meanwhile, Import prices fell 4.6% in the second quarterin this case the minimum for the same period since 2021. In the first half of the year, the reduction was 4.9%.
In this case the negative variations were mainly explained by the Intermediate Goods (IG) and the energy productsAmong the former, there were notable declines in vegetable and food products, chemicals, plastics, wood and textiles.
Faced with these changes, the terms of trade worsened by 2.6% between April and June, compared to the same months last year, and were almost 10% below the 2021 peak.
In terms of quantities, there was a 23.9% drop in imports during the first half of the year and a 27.2% drop in the last quarter, as a result of the deep recession and the bureaucratic obstacles that companies still faced when importing products from other countries. In parallel, export quantities improved by 23.5% in the first half of the year and 27.6% in the quarter, mainly due to the low comparison base due to the drought in 2023 and the good performance of the energy sector.
Trade surplus in 2024
In it first half of 2024 a was verified trade surplus of more than US$10 billion. Although this gives the Central Bank the possibility of accumulating reserves and offsetting expenditures on trade in services and debt payments, it is worth clarifying that the situation would be different with a buoyant economic activity.
This is because, for every point of GDP growth, imports usually increase three times as much as the historical average. On the contrary, when the economy is in a recession like the current one, they sharply cut back on their purchases from abroad.
Source: Ambito
