The trade deficit with Brazil was reduced by 93% during 2024: what is estimated for this year

In 2024, Argentina’s bilateral trade deficit with Brazil was reduced by 93%compared to 2023, due to both a sharp drop in imports and an improvement in exports. However, by 2025 a deterioration is expected in the balance due to the recovery of economic activity at the local level, the elimination of the PAIS Tax and the exchange appreciation.

The exchange of goods with the main trading partner during the year just ended involved a negative result of US$308 million, much lower than the “red” of US$4,714 million which had been verified the previous year. This was a consequence of a 16.9% contraction in purchases from the neighboring country and a 13.2% increase in sales.

On the import side, the decline was fundamentally explained by the collapse in soybean purchases, which meant a saving of US$1,938 million in relation to 2023. This was part of the rebound that the agricultural sector experienced after the deep drought it suffered during the last year of the Frente de Todos government.

A report by the consulting firm Abeceb also highlighted the influence of decrease in the acquisition of electrical energy of Brazilian origin as well as the recessionwhich generated a general reduction in imports.

Meanwhile, The increase in exports was fundamentally generated by greater shipments of vehiclesboth for the transport of goods and passengers; between both segments They contributed US$731 million more than in the previous year. Wheat sales also stood out, also fueled by overcoming the drought.

In particular, In December the deficit with Brazil was US$52 million, the lowest of the last four records. Within the framework of the normalization of payments for purchases abroad, and due to the low comparison base at the end of 2023, Imports showed a year-on-year jump of 55.5%and 31.7% in the last four months, driven largely by the automotive sector.

For its part, exports grew 40% year-on-year in December and chained seven consecutive months of growth. In this case, the higher car sales also stood out.

Outlook for 2025

Looking ahead to 2025, Abeceb foresees a bilateral deficit of no less than US$3 billion. “Without a doubt the recovery of activityconsumption and investment in Argentina will be a crucial factor in the increase in the bilateral trade deficit, taking into account that structurally we are in deficit with Brazil and a significant rebound in imports in general is to be expected, in a context of elimination of the COUNTRY Tax and a Argentine peso that has appreciated significantly against the Brazilian real,” the consultancy firm further elaborated.

Regarding the economic reactivation in Argentina, Federico Vaccarezza of the Economic Observatory of Argentine Industrial SMEs (IPA) clarified in dialogue with Scope which is still a fact to be corroborated, since “with widespread social discontent on the rise and with elections in progress that are not auspicious for the ruling party, the markets can become very nervous.”

“While the improvement of Brazilian competitiveness and the appreciation of the Argentine peso are an accomplished fact, the improvement of Argentine exports and the recovery of the Argentine economy are hypotheses for 2025. If the economy starts, the deficit will increase even more“, he noted.

Abeceb sees in the Brazil’s fiscal problem a scenario in which the problem currency continues to have devaluation pressures, which would favor a more favorable trade balance for the region’s main economy. The same happens with the cooling of the activity that the country presided over by Lula Da Silva could suffer in case interest rates rise more than expected. “Without a doubt, the fact that the level of activity in Brazil does not suffer more than necessary is the variable that worries us the most because it is always the most determining variable when explaining intra-Mercosur trade flows,” he warned.