Alarming plunge in first half of the year exposes challenge facing local industrial sector
The impact of the deep recession in neighbouring Brazil on Argentine businesses has been fully exposed — data from a consultancy firm revealed yesterday that exports by the local industrial sector to Latin America’s biggest economy have slumped by a staggering 24 percent over the last six months.
The alarming plunge, illustrated in the data released by the Abeceb consultancy agency yesterday, confirms that Argentina’s businesses are struggling in their search to find markets for their exports, with sales to Brazil — the country’s main outlet — falling to US$4.2 billion in the first half of the year. That, in turn, has a knock -on effect on Argentina’s trade deficit with Brazil, which has soared to US$2.3 billion, more than twice the figure of a year ago.
The drop comes as Brazil continues to struggle with a deep recession, which has caused demand to tank and imports to contract steadily as a result.
“Over the first half of the year, sales to Brazil amounted to US$4.2 billion, down by 23.9 percent on the year. Exports fell even when compared with periods in which they had also registered losses: when seen against figures from 2013’s first half, which stood at US$8.8 billion, exports have been slashed by half,” a report from the Abeceb consultancy agency analyzing Brazil’s most recent data said yesterday.
Brazilian overall imports fell by 28.9 percent on the yearly comparison, close to the figure seen in Argentine trade specifically.
Trade in trouble
The country’s partnership with Brazil at the Mercosur trade bloc secures Argentina a destination for most of its industrial exports, which are not competitive to sell almost anywhere else. Some Argentine products such as cars get priority above those from other countries in Brazilian markets, and the same is true for some Brazilian products in Argentina.
But restrictions on trade and slowed-down economies has meant that sales between both nations have been steadily falling for some years now.
During the first half of 2016, bilateral trade fell by 10.6 percent, but the figure was the continuation of a longer-standing trend.
According to Abeceb, Argentina’s overall trade with Brazil was down by 16.7 percent in the first half of 2015 on the yearly comparison, and also 20.2 percent down in the first half of 2014 when compared against 2013.
That means that trade with Brazil has plunged from US$14.5 billion in the fist half of 2014 to just US$10.7 billion at present.
Imports from Brazil were roughly stable over the past half of the year, up by 0.8 percent to reach US$6.3 billion. But they have also been on a declinining path over the past three years.
The peso and the real
One of Brazil’s responses to its crisis has been the devaluation of its currency, the real. That helped sustain its exports somewhat, but it also made Argentine products harder to sell to the neighbouring country.
Over the last month, however, the peso saw a strong devaluation as a reaction to Great Britain’s exit from the European Union, while the real has been on an upward trend following market confidence in Brazil’s new government.
That could help Argentina see its exports to Brazil recover somewhat, as it resulted on a 19 percent deppreciation of the peso when compared to the real, making its products more competitive.
The struggling Argentine industry, which has been posting declining output figures over the last two years due to contagion from Brazil, could have some reason for optimism if that continues to be the case, even though it still hasn’t found its bottom.
— Herald staff
The impact of the deep recession in neighbouring Brazil on Argentine businesses has been fully exposed — data from a consultancy firm revealed yesterday that exports by the local industrial sector to Latin America’s biggest economy have slumped by a staggering 24 percent over the last six months.
The alarming plunge, illustrated in the data released by the Abeceb consultancy agency yesterday, confirms that Argentina’s businesses are struggling in their search to find markets for their exports, with sales to Brazil — the country’s main outlet — falling to US$4.2 billion in the first half of the year. That, in turn, has a knock -on effect on Argentina’s trade deficit with Brazil, which has soared to US$2.3 billion, more than twice the figure of a year ago.
The drop comes as Brazil continues to struggle with a deep recession, which has caused demand to tank and imports to contract steadily as a result.
“Over the first half of the year, sales to Brazil amounted to US$4.2 billion, down by 23.9 percent on the year. Exports fell even when compared with periods in which they had also registered losses: when seen against figures from 2013’s first half, which stood at US$8.8 billion, exports have been slashed by half,” a report from the Abeceb consultancy agency analyzing Brazil’s most recent data said yesterday.
Brazilian overall imports fell by 28.9 percent on the yearly comparison, close to the figure seen in Argentine trade specifically.
Trade in trouble
The country’s partnership with Brazil at the Mercosur trade bloc secures Argentina a destination for most of its industrial exports, which are not competitive to sell almost anywhere else. Some Argentine products such as cars get priority above those from other countries in Brazilian markets, and the same is true for some Brazilian products in Argentina.
But restrictions on trade and slowed-down economies has meant that sales between both nations have been steadily falling for some years now.
During the first half of 2016, bilateral trade fell by 10.6 percent, but the figure was the continuation of a longer-standing trend.
According to Abeceb, Argentina’s overall trade with Brazil was down by 16.7 percent in the first half of 2015 on the yearly comparison, and also 20.2 percent down in the first half of 2014 when compared against 2013.
That means that trade with Brazil has plunged from US$14.5 billion in the fist half of 2014 to just US$10.7 billion at present.
Imports from Brazil were roughly stable over the past half of the year, up by 0.8 percent to reach US$6.3 billion. But they have also been on a declinining path over the past three years.
The peso and the real
One of Brazil’s responses to its crisis has been the devaluation of its currency, the real. That helped sustain its exports somewhat, but it also made Argentine products harder to sell to the neighbouring country.
Over the last month, however, the peso saw a strong devaluation as a reaction to Great Britain’s exit from the European Union, while the real has been on an upward trend following market confidence in Brazil’s new government.
That could help Argentina see its exports to Brazil recover somewhat, as it resulted on a 19 percent deppreciation of the peso when compared to the real, making its products more competitive.
The struggling Argentine industry, which has been posting declining output figures over the last two years due to contagion from Brazil, could have some reason for optimism if that continues to be the case, even though it still hasn’t found its bottom.
— Herald staff
