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miércoles, 30 de julio de 2003

Ambito, The volume of trade to Brazil decreased

Ambito Financiero Newspaper
Pablo Tigani

The volume of trade to Brazil decreased.

The narrowness about total balance of trade with Brazil is the aggregate of the stagnation that our neighbor is living at the moment, plus the backward movement that our country experienced from the second quarter 1998 to 2002. Already in 1999, as a result of high interest rates and later devaluation of Real in Brazil, Argentine exports were reduced 28%, going from u$s 8 billion to u$s 5.7 billion.
The recently down sizing of companies as Volkswagen, with their consequent impact over the internal demand, reduce our exports flow.
Although both presidents have a great level of political agreement, it’s still been insufficient for speeding up the bilateral commerce that fell from u$s 15 billion in 1998 to only u$s 7.3 billion in 2002.
This collapse of trade between both countries in four years resulted in the fall by 50%, with tendency to fall in the first 5 months of this year (4.5% less than 2002).

In this way, imports from Brazil in 2002 reached only 36% in compared with 1998. The total trade was shrunk in 2002, operating 36% less than 2001. And, whereas during 1998 we sent to Brazil 30% of our total payments, last year they dropped to 18, 5%; and nowadays, they represent 17, 3%.

On the other hand, Argentina’s participation as supplier of Brazil was of 13, 9% in 1998, when today it’s around 10%. As a client of Brazil our purchases represented 13.2 % in 1998, whereas in 2002 they were only 3, 9%.
As well as Argentine total exports grew 19% in the first quarter; the shipments to Brazil fell 9%. Finally, in May they fell 14% (year to year), and thus a "red alert" took place in the UIA (Argentina Industrial Union). Clearly, the reason of such alarm was that the biggest fall in exports were manufactures of industrial origin, basically automobile, milk, textile, mills and electrical appliances. These are products that depend on the Brazilian demand and almost 1/3 of those items go to Brazil.
As well as it first happened in Argentina; all the imports are falling in Brazil today, not only those that come from Argentina. Evidently, Brazil is in a forced process of imports replacement.

On the contrary, Argentina has showed a rise in total imports by 8.4% in the first quarter. However, when we observe the imports separately, the imports from Brazil grew 71%. Clearly, we are comparing the period in which Argentina burned in flames. From that moment that was the bottom crisis, the domestic demand has recovered in growing way.

On the other hand, the industrialists´ distrust is big because the imports of capital assets grew more than others (128% in the first quarter). Two thirds of this kind of imports was bound for farm, which lives its exclusive “Disneyland” from 2002.
If one observes the bilateral type of real exchange, this one is on average levels similar to figures from period 1994 – end of 1998; but there is a type of exchange more depreciated in both countries, although both has come appreciating in the last months.

Below the bilateral trade’s perspective, with Brazil growing only 1.5% and Argentina getting out of a tight spot, this scene doesn’t shine enough. It represents u$s 8.7/8.8 billion. Regarding to the balance of the first quarter, although Argentina showed a surplus of 400 million, it has come down; and if the tendency stayed, it could be disappear.

After 5 years and four months that Argentina accumulated a surplus of u$s 5 billion, It would happen a truce between the countries.

(*) Masters in International Economic Policy.

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