Itaú BBA - ARGENTINA – Solid trade surplus in June

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ARGENTINA – Solid trade surplus in June

julio 26, 2019

The shift in the trade balance is driven by falling imports.

Argentina’s trade balance posted a solid surplus in June. The trade surplus reached USD 1.1 billion in June, compared with a deficit of USD 0.3 billion in the same month of 2018. The surplus was in line with both our expectation and the Bloomberg market survey, both at USD 1.0 billion. The 12-month trade balance rose to USD 6.6 billion, from USD 5.2 billion in May. At the margin, the three-month cumulative and annualized surplus reached USD 11.5 billion, down from the USD 12.4 billion registered in the quarter ended in May.

The shift in the trade balance is driven by falling imports. Total imports declined by 27.9% yoy in 2Q19, similar to the drop in the previous quarter. Adjusted for seasonality, purchases from abroad fell by 24% qoq/saar in June. Imports of capital goods and parts fell by 28.7% yoy in 2Q19, in line with weak investment. Consumer goods imports (including cars) fell by 43.6% yoy in the period, while imports of intermediate goods dropped by 14.4%.

Continued surge in Agricultural products offsets subdued performance of external manufacturing sales. Total exports increased by 6.8% yoy in 2Q19 (up from a drop of 2.3% yoy in 1Q19), but declined by 9.4% qoq/saar. Agricultural exports (including manufactured agricultural products) grew 12.0% yoy in 2Q19, due to higher shipments of soy and cereals. Industrial product sales continued to show a lackluster performance, dropping by 4.6% in the period, mostly affected by lower sales of biodiesel and cars. 

Energy balance improved again in June, mostly due to lower imports. The accumulated 12-month deficit fell to USD 1.4 billion, a marked improvement from the USD 2.4 billion registered in December 2018.

We see upside risks to our forecast of a trade surplus of USD 7.5 billion for 2019 (from a USD 3.8 deficit last year), with a significant narrowing of the current account deficit to 1.2% of GDP.

Juan Carlos Barboza
Diego Ciongo

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