Itaú BBA - ARGENTINA – Strong trade surplus in April

Macro Latam

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ARGENTINA – Strong trade surplus in April

mayo 23, 2019

The adjustment of external accounts is on track.

Argentina’s trade balance posted a new surplus in April. The trade surplus reached USD 1.1 billion, compared with a deficit of USD 0.9 billion in the same month of 2018. The surplus exceeded our expectations (USD 900 million), but fell below the market consensus of USD 1.6 billion (as per Bloomberg). The trade balance accumulated in 12 months jumped to USD 2.3 billion, from USD 0.8 billion in March. At the margin, the three-month cumulative and annualized surplus was USD 10.3 billion, up from the USD 9.0 billion registered in the quarter ended in March.

Imports tumbled in April, highlighting the fragility of output stabilization many thought possible in the early months of the year. Total imports declined 31.6% yoy and 1.4% mom/sa, adjusted for seasonality. Weak investments led to lower imports of capital goods and parts, which fell by 35.2% yoy. Consumer goods imports (including cars) fell by 55.1%, while imports of intermediate goods dropped by 17.1%.

Exports increased, driven by agricultural products. Total exports increased by 1.7% yoy in April (-2.5% mom/sa), driven by agricultural exports (including manufactured agricultural products), as expected, which grew by 3.8% yoy. On a negative note, industrial product sales dropped by 2.3% yoy, mostly affected by lower car sales to Brazil. We expect agricultural exports to continue to pick up in May, due to the expected normalization of soy output after last year’s severe drought.

Energy balance improved once again in April, due to lower imports. The accumulated 12-month deficit fell to USD 2.1 billion in April, from USD 2.4 billion in December 2018.

The adjustment of external accounts is on track. We expect weak currency and lower internal demand to lead to a trade surplus of USD 5.5 billion for 2019 (from a USD 3.8 deficit last year), followed by a major narrowing of the current account deficit to 1.2% of GDP (down from 5.4% in 2018).

Juan Carlos Barboza
Diego Ciongo

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