ARGENTINA – Robust current account surplus in 2Q21

We forecast a current account surplus of 0.8% of GDP for 2021

Juan Carlos Barboza & Diego Ciongo

16/09/2021


The current account showed a surplus of USD 2.8 billion in 2Q21, from a surplus of USD 2.9 billion in the same quarter of 2020, supported by a strong trade balance. The surplus surpassed market expectations of USD 2.0 billion, according to Bloomberg. The four-quarter cumulative current account balance posted a surplus of 0.8% of GDP in 2Q21. At the margin, we estimate that the seasonally-adjusted current account balance had a surplus of 2.3% of GDP in 2Q21.



Trade surplus for goods remained virtually unchanged in 2Q21, relative to 2Q20. Exports increased by 40.4%, helped by higher commodity prices, while imports increased by 66.5% yoy, in line with the recovery of activity that followed the easing of mobility restrictions. The trade balance for goods consequently fell to a surplus of USD 5.2 billion in 2Q21, slightly down from a surplus of USD 5.3 billion in the same quarter of 2020. The deficit in the service account widened to USD 0.7 billion (from USD 0.3 billion one year ago), mostly due to a deterioration in the deficit of the tourism account. The income balance (net interest bill and dividend payments) improved to a deficit of USD 2.2 billion, from USD 2.5 billion in 2Q20.

The surplus in the current account drove an increase of USD 2.4 billion in international reserves in 2Q21. Foreign direct investment increased to USD 1.0 billion, from USD 0.4 billion one year ago. The inflow partially offset higher net financial payments of USD 1.3 billion, mostly related to public sector debt. External debt fell to USD 269.2 billion in 2Q21 (65.8% of GDP), from USD 271.4 billion at the end of 2020 (70.9% of GDP).

We forecast a current account surplus of 0.8% of GDP for 2021, unchanged from 2020. 

Juan Carlos Barboza
Diego Ciongo