Argentina's Trade Balance Falls Short of Projections Despite Government Measures
US Dollars 608 million surplus in Argentina's trade balance registered in May: Indec data suggests
June 19 - Buenos Aires, Argentina 🇦🇷 – Argentina's Trade Balance (ICA) clocked in at US$608 million in May, as reported by the National Institute of Statistics and Censuses (INDEC) on Thursday, well below the anticipated US$859 million surplus projected by analysts.
Although the government had taken steps to boost imports, these efforts didn't yield the expected results, as the trade balance still saw a deficit. Imports rose by 29.4% to US$6.5 billion, driven by a surge in demand for motor vehicles, capital goods, and electronics. The increased imports put a damper on the projected trade surplus.
Exports, however, struggled in May, falling by 7.4% to US$7.1 billion, marking weaker than expected performance. Although exports had seen a 5.8% year-over-year growth during the first four months of the year, the declining export volumes of key commodities such as wheat, soybean flour, and biodiesel due to regulatory uncertainties and lowered export volume of natural gas narrowed the trade surplus.
Despite these challenges, Argentina has managed to maintain an overall trade surplus for 18 consecutive months. For more details, check out the latest reports on the INDEC's website.
In-Depth Insights:
- Why did the trade balance fall short?
- Lower-than-expected exports: Exports in May totaled approximately US$7.1 billion, but a 7.4% decrease compared to the previous period suggests weaker export performance than expected. Although certain key commodity exports like wheat and soybean flour declined, and biodiesel exports collapsed due to regulatory uncertainty, these exports still accounted for a significant portion of export revenue.
- What drove the surge in imports?
- Strong demand: Imports in May reached around US$6.5 billion, with significant increases in motor vehicles, capital goods, and consumer electronics imports.
- How did the trade surplus shrink?
- Widening gap: The US$608 million trade surplus was US$251 million below the market expectation of US$859 million, being the smallest surplus since July 2023. This significant decrease also represents a 79% decrease in the trade surplus year-to-date compared to the same period in 2024.
- What challenges did Argentina's external sector face?
- Setbacks in traditional export sectors: Certain commodities such as agriculture and energy experienced setbacks, contributing to falling export volumes and offsetting gains from crude oil and gold exports.
- What's the broader economic context?
- Economic recovery: Argentina's economy is projected to grow by 5.2% in 2025, largely due to increased consumption, investment, and easing capital restrictions. However, the recuperating economy faces challenges such as a deteriorating current account despite gradually easing inflation.
- The trade surplus shrank due to the widening gap between the actual trade balance of $608 million and the projected surplus of $859 million, showing the greatest deficit since July 2023.
- This decrease in the trade surplus was driven by lower-than-expected exports, particularly in key commodities like wheat, soybean flour, biodiesel, natural gas, and a decline in export volumes, as well as a surge in imports, particularly in motor vehicles, capital goods, and consumer electronics, which increased demand.
