Itaú BBA - ARGENTINA – Record trade surplus in 2019

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ARGENTINA – Record trade surplus in 2019

Janeiro 24, 2020

We expect the trade surplus to remain wide in 2020

The trade surplus in December once again surprised to the upside. The trade balance showed a USD 2.2 billion surplus in December, above market expectations of a surplus of USD 2.1 billion, according to a Bloomberg survey. The trade surplus for 2019 consequently reached USD 16.0 billion, beating our forecast of a surplus of USD 15.5 billion and marking the highest reading since 2009. At the margin, the annualized surplus adjusted for seasonality reached USD 26.2 billion in 4Q19.

Mixed behavior across export sectors. Total exports increased by 6.7% yoy in 4Q19 (from 9.9% yoy in 3Q19) and 29.3% qoq/saar. Agricultural exports (including manufactured products) grew 15.2% yoy in 4Q19, propelled by soy and corn shipments. Sales of industrial products fell 4.5% yoy in 4Q19, mostly due to a drop in car sales, particularly to Brazil.  

Monthly imports ended last year at historical lows. Total imports declined by 20.1% yoy in 4Q19 (-22.6% yoy in 3Q19), in line with economic activity. At the margin, imports plummeted by 35.8% qoq/saar (-10.7% in 3Q19). Consumer goods imports (including cars) fell by 24.4% yoy 4Q19, affected by a weaker currency and lower real income. Imports of intermediate goods dropped by 24.9% in the period, while purchases of capital goods and parts declined by 11.5%. 

Significant adjustment of the energy balance in 2019. The energy trade deficit fell to USD 0.3 billion from USD 2.3 billion in 2018. Oil exports rose by 4.1% last year (driven by higher volumes), while imports plummeted 32.2% yoy vs. 2018 (on lower volumes). 

We expect the trade surplus to remain wide in 2020. We forecast a USD 14.5 billion trade surplus for 2020, leading to a current account surplus of 0.4% of GDP, from an estimated deficit of 0.6% of GDP for 2019.

Juan Carlos Barboza
Diego Ciongo

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