Itaú BBA - ARGENTINA – Trade surplus declined in September

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ARGENTINA – Trade surplus declined in September

October 22, 2020

Our forecast for a surplus of USD 17.5 billion for this year has downside risks.

The trade surplus narrowed in September, on higher imports and weaker exports. The trade balance showed a surplus of USD 0.6 billion in September, down from a surplus of USD 1.7 billion a year earlier and below our projection of USD 1.5 billion. The 12-month trade surplus decreased to USD 18.1 billion. At the margin, the seasonally adjusted annualized surplus for 3Q20 fell to USD 13.5 billion, compared with USD 16.6 billion in 2Q20.



Broad-based decline in exports on a year-over-year basis in 3Q20. Total exports decreased by 15.2% yoy in the period, but they increased at the margin. On a sequential basis, exports grew 11.25% qoq/saar (from -38.9% in 2Q20). Exports of industrial products contracted by 26.4% yoy in 3Q20, from a 52.4% yoy contraction in 2Q20, caused by plummeting car exports. Agricultural exports, including manufactured products, decreased by 9.4% yoy from +4.7% in the previous quarter.
 
Imports contracted in 3Q20 on a year-over-year basis but rebounded strongly on a sequential basis. Total imports declined by 16.7% yoy in the quarter ended in September, but they increased by a hefty 59.2% qoq/saar (from -45.9% in 2Q20), which was in line with the sequential recovery in activity. Purchases of capital goods and parts dove by 25.5% yoy in the period, accompanying the drop in private investment. Consumer goods imports (including cars) decreased by 10.6% yoy in 3Q20, followed by an 3.6% decline in imports of intermediate goods.
 
The incipient surplus in the energy trade balance increased. The rolling 12-month surplus reached USD 457 million in September, up from a surplus of USD 61 million in June, driven by a 46.1% yoy decline in oil and gas imports in 3Q20, which was partially offset by a 24.6% drop in exports.
 
Our forecast for a surplus of USD 17.5 billion for this year has downside risks, mostly due to the likely negative impact on exports of uncertainty over the official exchange rate.



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