Decline in Exports to Argentina Reduces Brazil’s Surplus with Mercosur, Says Itamaraty

On Monday (2), Ambassador Gisela Padovan, the Secretary for Latin America and the Caribbean at the Brazilian Ministry of Foreign Affairs (known locally as Itamaraty), revealed that a drop of more than 20% in Brazil’s exports to Argentina hit the surplus the country had been maintaining with the Mercosur bloc.

In addition to Brazil and Argentina, Mercosur includes Uruguay, Paraguay, and Bolivia. The presidents of these countries will convene later this week in Montevideo for the bloc’s summit, which will focus primarily on the potential closing of trade talks between Mercosur and the European Union.

“Last year, Brazil exported an equivalent of US$ 23.5 billion, or 6.9% of our exports, to Mercosur countries and imported US$ 17 billion, which is equal to 7% of total Brazilian imports; this resulted in a surplus of US$ 6.5 billion, which is very relevant. Unfortunately, the surplus has decreased this year due to the drop in exports to Argentina,” said Padovan.

The expectation is that the surplus achieved in 2023 could be nearly wiped out this year.

Here’s a chart showing the main trends in exports of containers from Brazil to Argentina in the first ten months of the year from 2021 through 2024. The data is derived from Datamar’s DataLiner.

Container Exports to Argentina | Jan-Oct 2021 through Jan-Oct 2024 | TEUs

Source: DataLiner (click here to request a demo)

According to data from the Ministry of Development, Industry, Commerce, and Services (Mdic), Brazil’s exports to Argentina saw a sharp decline. They dropped from US$14.9 billion between January and October last year to US$11.2 billion in the same period of 2024.

During a briefing with the press about the Mercosur summit, Padovan attributed this contraction to policies promoted by Argentina’s ultraliberal president, Javier Milei.

“I think that reflects the overall adjustment in the Argentine economy, the drop in purchasing power. There are positive macroeconomic indicators, but there is an increase in poverty, rising unemployment, and a decrease in household income—workers and retirees. I think this necessarily leads to a decrease in sales,” Padovan said.

“It’s the only explanation; there’s a 20% drop year-on-year… What did actually change? A new Argentine government came in, wanting to promote a powerful adjustment. So, this has implications that are unfortunately negative for us. Let me put it this way: we had a surplus of US$ 6.5 billion last year regarding exports to Mercosur. Now it’s practically even out.”

Regarding trade talks with the European Union, the Secretary for Economic and Financial Affairs at Itamaraty, Ambassador Mauricio Lyrio, said that a final round of negotiations took place last week in Brasília, and the remaining issues were submitted to the leaders of both blocs.

“We keep the progress in negotiations in the highest regards. President Lula himself has already referred to the fact that he expects the negotiations to be concluded by the end of the year,” Lyrio said.

Source: Folha de S. Paulo

Click here to read the original text: https://www1.folha.uol.com.br/mercado/2024/12/queda-de-exportacoes-para-a-argentina-impacta-superavit-do-brasil-com-mercosul-diz-itamaraty.shtml

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