Itaú BBA - ARGENTINA – Trade surplus collapsed in November

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ARGENTINA – Trade surplus collapsed in November

December 22, 2020

We see downside risk to our trade surplus forecast of USD 15.0 billion for this year.

The trade surplus plummeted in November, showing the lowest reading since October 2018. The trade balance showed a surplus of USD 0.3 billion in November, significantly below the USD 2.5 billion surplus posted a year earlier and below the market consensus of USD 1.1 billion, according to Bloomberg.  The 12-month trade surplus fell to USD 14.8 billion, from USD 17.0 billion in the previous month. At the margin, the seasonally adjusted annualized surplus for the quarter ended in November fell to USD 6.4 billion, from USD 11.3 billion in October.
 

Exports for the quarter ended in November collapsed on year-over-year basis, with a weak performance across all items. Total exports fell by 21.5% yoy in the quarter and by 3.8% qoq/saar in the month (from a gain of 3.6% qoq/saar in October). Exports of industrial products contracted by 28.8% yoy in the quarter ended in November, from a 23.6% yoy contraction in October, still driven by plummeting car exports. Agricultural exports, including manufactured products, decreased by 16.3% yoy in the period, following a 12.0% decline in the previous month.
 

Imports rebounded late in the year. Total imports rose by 6.2% yoy in the quarter ended in November and by a hefty 138.5% qoq/saar, in line with the sequential recovery of activity in the period. Purchases of intermediate goods increased by 18.6% yoy, while imports of consumer goods (including cars) expanded 11.1% yoy in the quarter ended in November. On the other hand, imports of capital goods and parts fell by 0.7% yoy in the period, accompanying the weak private investment. 
 

The energy trade balance posted a modest surplus. The rolling 12-month surplus came in at USD 339 million in November, up from a deficit of USD 136 million in 2019, driven by a reduction in oil and gas imports that more than offset a drop in exports.
 

The recent small trade surplus introduces significant downside risk to our trade surplus forecast of USD 15.0 billion for this year. The official exchange rate overvaluation coupled with the economic reopening (and the resultant recovery of internal demand) is putting downward pressure on the trade balance - the key source of dollars for the economy. 



​​​​​​​Juan Carlos Barboza
Diego Ciongo



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